Taiwan-based tier-two LED firms Top Energy Saving System (TESS) and Lumitek have both announced the voluntary delisting of their common stocks from the emerging stock maket in Taiwan.
TESS was established in October 2007 and has been eager to enter the LED lighting market using low prices. At one point when LED lighting prices were still high, TESS adopted online distribution channels to lower the price of its LED light bulbs to NT$199/unit (US$6.66/unit). According to the firm, its LED light bulb shipments in 2012 reached around 800,000 units. However, rapid price falls have been putting pressure on TESS.
The firm was listed in the emerging stock market in 2011.TESS stated that the board of directors has now decided to remove the firm from the stock market but will remain a public company. The decision is due to the weak economy causing the firm to miss revenue and profit targets. TESS noted that this is only a temporary halt to the listing until company operation returns to expectation.
According to the financial results announced by TESS, revenues in first-half 2012 were NT$146 million with gross margin around 3.05%. However, due to high operating expenses, the firm reported net operating loss of NT$57.5 million for first-half 2012.
Lumitek is an LED sorting firm and its major customers include chipmakers such as Huga Optotech. However, due to industry consolidation, the firm has been restructuring its customer base. Lumitek noted that the accumulated net loss in 2012 reached over 50% of its NT$370 million contributed capital, and hence the company decided to voluntarily delist from the local stock market.
Sources with Taiwan's LED sector pointed out that because US-based LED firm Cree introduced LED light bulbs with retail price under US$10/unit, other firms have begun to adopt similar low-price strategies. Despite the fact that falling retail prices can stimulate market demand and commercialization of LED lighting, it also means the LED industry will enter a period of cost competition and low profits. Despite the bright prospect of the LED lighting industry, due to price competition, small- and medium-size LED firms have not been able to benefit from demand growth.
LED chipmaker Epistar believe small-size LED firms with less financial capital may not be able to compete in the long run and an industry reshuffle will be more imminent in 2013.
