Epistar Corp (晶元光電), the nation’s No. 1 LED chipmaker, expects its operating income to improve next quarter on the back of recovering demand for LED lighting and stabilizing prices after the industrial slump hit bottom this quarter, a company executive said yesterday.
Chairman Lee Biing-jye (李秉傑) said that a global lighting brand’s price cuts for LED bulbs spurred severe pricing competition in the US market this quarter.
That prompted LED chip suppliers, including Epistar, to lower their prices or redesign chips to meet clients’ demand, Lee said.
International lightning company Royal Philips NV launched a sales promotion in April, offering two 60-watt equivalent LED bulbs for just US$4.95 in the US market — a sharp reduction from its previous price of US$9.97 for a single lamp.
Last month, Epistar’s revenues plunged 18.8 percent from a year earleir and 12.4 percent from April to NT$2.26 billion (US$72.5 million). Sales for April and last month totaled NT$4.84 billion, a decline of 8.67 percent from the same period last year, according to the company’s filing with the Taiwan Stock Exchange.
Lee said the firm’s LED lighting segment, which accounted for 30 percent of total revenues, was affected by falling average selling prices and soft demand extending from the first quarter.
“However, I think the price-cutting has stopped, as there is no more room for price concessions,” Lee told reporters after the firm’s annual general meeting.
As Epistar has finished redesigning its chips and prices have stabilized, Lee said he expects Epistar’s LED lighting shipments next quarter to grow significantly from this quarter.
The company’s LED backlight unit segment, which contributed 30 percent to total revenues, should also perform better compared with this quarter, fueled by the growing demand for backlight units for TVs from China next quarter, Lee said.
Given increasing demand for LED lighting and backlights, the company’s utilization rate should increase significantly from this quarter’s 70 percent, he added, but declined to provide estimates.
“I expect next quarter’s core business would be better than the combination of this quarter and last quarter,” Lee said.
Epistar’s operating income plummeted dramatically in the first quarter of this year to NT$21.03 million, from last year’s NT$319.01 million, mainly due to inventory correction because of weak demand for LED lighting and backlights.
UBS Securities Pte Ltd said on June 11 that it expects Epistar’s revenues next quarter to grow by 15 percent to 20 percent from this quarter’s estimates of NT$7 billion, driven by inventory restocking demand for LED backlights for TVs and general lighting products.
Epistar shares dropped 2.54 percent to NT$40.30 in Taipei trading yesterday, underperforming the TAIEX, which lost 2.39 percent.
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