The LED industry showed stable growth in first half of 2014, with conventional peak season arriving in 3Q14, many LED manufacturers July 2014 revenues set new historical records including listed companies Everlight, FOREPI and Lextar. LED upstream sapphire substrate manufacturers revenues were slightly weak last month, with only listed company Crystalwise Technology showing strong revenue income. Other listed sapphire substrate manufacturers including Rigidtech and others have also expanded production capacity. However, since handheld devices optical demands did not grow significantly, substrate prices have started to slide.
Although, upstream sapphire substrate prices have eased, demands have fallen short of manufacturers expectations. Still, LED die manufacturers revenues continued to grow steadily. Even though Epistar failed to keep up high growths in July 2014, its accumulated revenue compared to the same period last year was up 39 percent. The company’s gross margin in particular has soared from 5.5 percent in 2013 to 21.4 percent in 2Q14. Epistar’s AlInGaP LED and other high end products acquired significant global market share that contributed to the gross profit growth of more than 20 percent.
Another LED die manufacturer FOREPI (which is now an Epistar subsidy) has also seen monthly revenue set new records to NT $541 million (US $58.41 million), due to rising prices for single OEMs and orders from big clients. Since new OEM gross profits are better than average, the company’s revenue in 3Q14 is expected to improve significantly. Everlight and Lextar’s revenue last month set new historical records. With the two companies’ production reaching full capacity, the two have continued to expand production capacity. Benefiting from lighting market demands, the companies are optimistic the peak season would continue into 4Q14. It is likely that the industry’s evaluations made earlier this year that the peak season will run through the entire year will be achieved. The company still has a 30 percent production capacity shortage in the high-end blue light market. Clients have reflected lighting demands are likely to grow 50-100 percent annually because of strong LED lighting demands this year.
Overall top LED manufacturers have shown good order visibility, analyzed Taiwanese financial institutes. Since most manufacturers have met full production capacity in 3Q14, these manufacturers are likely to keep up high revenue levels in 4Q14. Additionally, the industry has continued to restructure and concentrate. Manufacturers have continued to shift towards the development of high value products and niche markets, which has established the LED industry’s mid-term growth foundation.
