Taiwan-based LED chipmaker Epistar will issue new shares in order to obtain a 100% stake in Huga Optotech, the firm announced on September 28. Huga Optotech has been officially acquired by Epistar. According to Biing-Jye Lee, chairman of Epistar, the acquisition will help to improve Huga's technology and operation and Epistar expects to see benefits from the acquisition within six months, starting at March 2013.
Lee added that Epistar reported non-operating loss of NT$500 million (US$17 million) in first-half 2012, mostly due loss from investments in Huga. Huga's problem is lack of competitiveness in quality, said Lee. The market has been demanding high-brightness LEDs and despite that Huga has economies of scale, yields, quotes, and gross margin have been low. Epistar indicated that after the acquisition, there may be possible changes to Huga's workforce.
According to Lee, Epistar originally planned to fund NT$4 billion to construct a plant in Zhunan, Taiwan, however, after careful consideration of the fact that the LED chip market has been in oversupply, Epistar believes that improving Huga's technology and operation is a faster and more efficient way to expand capacity. Epistar will need six months to tune Huga's operation and expects revenues to improve in March 2013, said Lee.
Demand for LED backlight units (BLUs) continues to increase, according to Lee, and October orders have been higher than expected. Nevertheless, orders in November-December may pose a challenge and fourth-quarter sales are likely to show a 20% on-quarter decrease, added Lee. The market is unlikely to improve in 2013, stated Lee, and gaining profits will be difficult.
The growth trend for the LED lighting market is to continue and in the next three years, the cumulative annual growth rate (CAGR) of the market will be around 70%, said Lee.
Ming Jiunn Jou, president of Epistar (left), Biing-Jye Lee, chairman of Epistar (right)
