Epistar Corp (晶電), the nation’s largest LED chipmaker, expects revenue to be flat this year, but aims to improve its profitability through continued restructuring measures, chairman Lee Biing-jye (李秉傑) said yesterday.
“We would maintain our decision to freeze 25 percent of our total production capacity throughout this year and adjust Epistar’s product portfolio to improve our profitability,” Lee told reporters on the sidelines of the Taiwan International Lighting Show at Nangang Exhibition Hall in Taipei.
Due to the falling average selling price (ASP) of LED lighting products and sluggish demand for backlight units used in TVs, Epistar reported a net loss of NT$3.01 billion (US$93.04 million) last year, plummeting significantly from NT$1.81 billion made a year earlier.
That represented losses per share of NT$2.81 for last year, compared with the previous year’s earnings per share of NT$1.98.
As part of its restructuring plan, Epistar last month announced a plan to reduce its production capacity by suspending the operations of two of its plants in Taiwan and China.
While the move might lead to Epistar’s market share shrinking, reducing production capacity is an effective way to raise its production utilization rate and operation efficiency when the industry faces a supply glut, Lee said.
While implementing better cost structure and streamlining, the company is also shifting its focus to developing more profitable products, while stopping taking orders for those with poor ASP, he said.
On the back of its restructuring efforts and recovering demand for both backlight units for TVs and lighting products, Epistar’s revenue last month expanded 35.97 percent to NT$2.23 billion from February, while gross margin also swung back to positive territory last month, company data showed.
Yuanta Securities Investment Consulting Co (元大投顧) said in a report last month that a key problem facing Epistar is competition for its blue/white LED business from Chinese rivals aided by financial support from the Chinese government.
Lee said demand for Epistar’s LED lighting chips would be stronger than for its LED backlight units this year, as a growing global LED lighting penetration rate would boost demand.
The company’s LED lighting chip shipments are expected to grow from last year, but a low ASP is to remain a challenge for Epistar, he said.
Compared with the outlook for Epistar’s LED lighting and backlight units, Lee said he is more optimistic about the growth momentum of Epistar’s automotive LED chips and infrared applications this year.
Epistar is to introduce new automotive LED applications for the European market this year, and expects to see more revenue contribution from this segment, he said.
The company is upbeat about a growing usage of high-performance infrared applications and is to focus more on industrial-use products with higher margin, instead of infrared applications for consumer use this year, Lee said.
The company’s shares yesterday rose 2.19 percent to close at NT$23.35 in Taipei trading, outperforming the TAIEX, which gained 1.42 percent.
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