LED chipmaker Formosa Epitaxy has seen its order visibility extend to November and is currently in talks for new orders for LED backlighting and lighting products with 10 potential clients, according to company chairman Frank Chien.
Chien added that revenues from China-based clients have been increasing and demand may exceed capacities. LED lighting sales in third-quarter 2012 are likely to exceed 30% of total revenues of the quarter.
Formosa Epitaxy will continue to expand capacity in second-half 2012 due to full capacity in first-half 2012, said Chien. New capacities in the range of 12-15 units of MOCVD equipment will be added in the third quarter. The Pingzhen plant in Taiwan will incept 4-inch MOCVD equipment and add six more units of equipment by end of fourth-quarter 2012. Capacity expansion is to help the firm increase market share, said Chien.
The market demand does not have problems, the only uncertainty is the price, Chien pointed out. The price of products has been falling significantly and consumers are always looking for products with lower prices. Therefore, if the drop of LED chip's average selling price (ASP) is within 5%, the price should be considered steady, said Chien.
Through cooperation with Mitsui, Formosa Epitaxy has been introduced to TV backlight unit (BLU) firms in China and LED lighting clients in Japan.
Demand for LED light bulbs in Taiwan has been rising and Chien believes this trend will continue into second-half 2012.
According to statistics, total demand for LED chips for TV backlights in 2012 only require 450 units of MOCVD equipment, but the current number of total MOCVD tools in the world is around 1,200-1,500 units, which means oversupply remains a serious problem in the LED industry.
