LED makers have been seeing rising demand and capacity utilization rates in the second quarter of 2013. However, China-based makers noted that there is currently CNY5 billion (US$807 million) worth of inventory, and if end market demand is not as strong as expected, prices in China will be slashed in the third quarter.
Due to rising demand of TV backlighting products, LED makers have been seeing strong shipments since March. In addition, prices of LED lighting products have been falling, stimulating demand, hence capacity utilization rates at Taiwan-based upstream LED chipmakers such as Epistar and Formosa Epitaxy have been rising to above 80% and are expected to reach full capacity in the second quarter. Industry sources believe LED firms may return to profitability in the second quarter.
However, according to Biing-Jye Lee, chairman of Epistar, despite the fact that downstream firms have been increasing orders, end market demand is still unpredictable. Currently, said Lee, order visibility is clear to May and product price falls in the second quarter are expected to be 3-5% on average. But, added Lee, if demand weakens in the second quarter, customers will slash orders in June.
China-based LED firms noted that rebounding demand in the second quarter is only seasonal and downstream inventory levels have been rising. China-based firms have a lot of pressure to lower inventory levels which will affect Taiwan-based firms, said LED firms from China.
China-based LED firms disclosed that many peers have been focusing on the domestic LED lighting market starting the second-half of 2012. Most of the firms do not have clear order visibility beyond June.
