Tong Hsin Electronics Industry’s (THEI) will be raising the bar for competitors by increasing ceramic substrate laser drilling speed and adding packaging services as LED chip piece volumes used on substrates grow exponentially, said the company President Heinz Ru during a recent investor conference. The changes occurred in response to strong demands for LED ceramic substrates in the lighting market despite of impacts from Cree’s low-priced LED bulbs during the first half of 2013. Ru forecasted shipments for ceramic substrates applied in high-powered LEDs will continue to grow in 3Q13.
THEI’s revenue for 2Q13 was NT$1.91 billion (US$63.51 million), a Quarter on Quarter (QoQ) increase of 8.3%. The net profit for the quarter was NT$331 million with a QoQ gain of 2%, while EPS was NT$2.03. The company’s revenue for the first half of 2013 was NT$3.68 billion with a year over year (YoY) growth of 23%, while net profit YoY rate soared 94% to NT$ 656 million. EPS for the first half of 2013 was NT$4.03. From THEI’s product portfolio, ceramic substrate used in LED packaging still accounted the majority of 44%, image sensors took up 36%, hybrid modules and special packaging was 11%, while radio frequency module was 9%.
The ceramic substrate market in 2Q was affected by international lighting manufacturer’s strategy changes, due to impact from Cree’s launch of LED bulbs priced lower than US$10. Others are also paying close attention to THEI’s 3Q outlook for the ceramic substrate industry. Ceramic substrate shipments in 3Q will continue to grow, due to strong demands in the LED lighting market, said Ru.
Ru pointed out ceramic substrate pieces deployed evolved rapidly from a single substrate installed with 130 pieces of LED chips to 1,000 pieces. In the second half of 2013, the number of LED chips jumped to 2,000-3,000 pieces per substrate, and mainstream designs are now promoting 5,000 pieces. As a result, THEI is increasing laser drilling speed and has raised drilling speed by more than 30% with additional engineering devices. The company’s ceramic substrate factory expansion plans in the Philippines is estimated to increase production capacity by 15%-20%, and expected to be completed by 3Q13.
THEI’s penetration rate in the LED ceramic substrate market is 70%-80%, but with rising number of competitors the company is also adding packing services targeting Transient Voltage Suppressors (TVS) assembled on substrates. Ru pointed out only a few competitors offer packaging with the majority manufacturing substrates only. By providing packaging services, THEI will be raising the entry level bar for competitors.
At the conference, the company was also focused on the issue of EMC LED lead frames corroding mid-high powered LED lead frame market. The boundary between EMC LED lead frames and ceramic substrates is blurring. Despite growing trend of LED manufacturers introducing flip-chips, ceramic substrates still have an advantage. In addition, dual-chip and multi-chip package developments will further expand ceramic substrate applications.
