Rising price competition and negative impact from the debt crisis in Europe have been causing Taiwan-based LED firms to report on-year decreases in their financial results for first-half 2012. According to LED packaging house Everlight, ASPs in the LED market in first-half 2012 fell by double-digit basis points. Everlight's ASP also fell by 10% in the first half of the year, but the firm expects the price fall to ease in the second half, at around 5%.
The firm reported that second-quarter 2012 revenues saw a 13.5% sequential increase and capacity utilization rate was close to 80%. In the second quarter, Everlight saw net profits reach NT$235 million (US$7.89 million), an on-quarter increase of 179%. According to Pang-Yen Liu, Production Business Group GM and spokesperson for Everlight, the firm expects financial performance in the third quarter to be better than the second as the backlight and lighting markets enter the traditional boom season.
In the first half of the year, Everlight had an average gross margin of 22.01%, lower than the gross margin of 25% in the same period in 2011. Due to relocation of its headquarters and amortization at older plants, operating expenses increased by NT$52 million in the first half. Also, losses incurred from investments in LED chipmakers caused net profits in the first half to be NT$313 million, down 64.7% on year, and EPS at NT$0.75, a figure that was significantly lower than the NT$2.05/share in first-half 2011.
Revenues from mobile phone and consumer electronics applications accounted for 51% of total revenues in the first half of 2011. However, in 2012, the figure dropped to 49%. Nevertheless, with increasing penetration of LED TVs, revenues from backlight units (BLUs) in first-half 2012 increased to 19% from 16% in 2011. Revenues from lighting dropped to 8% in 2012 from 9% in 2011. The remaining 24% of total first-half revenues were from applications such as billboards and automobiles.
Liu believes the growth rate of the LED lighting market will continue to accelerate as the price of light bulbs from various brands has been dropping to US$10/unit and will continue to drop further in second-half 2012. Hence, the sweet spot of LED light bulb prices in 2013 is expected to be lower than previously forecast.
Liu added that in the future, Everlight will push both building its brand and increasing the percentage of OEM orders as its business model. However, revenues from LED lighting in the first half of the year were mainly from own-brand products, hence Everlight will continue to expand its distribution channels, develop large-size corporate clients and enter government project bids. Revenues from LED lighting are to account for more than 10% of total 2012 revenues, Everlight stated.
Despite the fact that revenue growth in the first half of the year was mainly from backlight products due to increasing penetration rate of LED TVs, side-lit models are still the mainstream, said Liu, and shipments of BLUs for direct-lit LED TVs have not increased significantly.
Liu explained that development of direct-lit LED TVs was curbed due to problems with patents and lens supply in the first half of the year. With increasing brightness efficiency and the release of new models with larger sizes, Everlight expects shipments of direct-lit LED TVs to increase in second-half 2012.
The third quarter has been seen as a boom season for BLUs as notebook firms are likely to increase orders for new models. Everlight expects revenues of backlight products to account for 20% of total 2012 revenues.
