Popular Keywords
News
Manufacturers Form Alliances within the Industry as LED Market Becomes Over-Competitive
Benefiting from the replenishment demand of branded manufacturers during the third quarter, output value for October showed decent growth compared to the same period of last year. According to LEDinside, a research division of TrendForce, total revenues for listed LED companies in Taiwan amounted to approximately $NT 9.27 billion, a 16.8% growth YoY. With oversupply remaining an issue within the LED industry, many manufacturers have turned to forming strategic alliances and investments as a means to ensure long term survival. In the future, the role played by LED makers is likely to expand beyond simply providing chips and components, with many expected and start making lighting equipments and other end products.
Chip Makers Begin Forming Strategic Partnerships, Eye Long Term Development
The LED epitaxy manufacturers have been facing a sluggish market momentum as well as lowered replenishment demand. After going public on October 2012, revenues for the Taiwan-based LED chip makers have been stable, amounting to NT $3.89 billion (MoM-0.7%, YoY +10.8%). A series of strategic partnerships amongst various manufacturers has been surfacing due to increased price competition and the oversupply situation within the LED chip industry.
Seeing how Mitsui is now the largest shareholder of Formosa Epitaxy with a 19.9% stake, LEDinside believes that a flexible strategy has been implemented on Formosa Epitaxy's part. When Mitsui brought the Taiwanese company's shares in 2010, Formosa Epitaxy was not only able to establish an OEM relationship with Sharp (for Backlight orders), but also receive orders from the Japanese lighting market as well. With a cross licensing agreement reached with Toyoda Gosei during 2012, the Taiwanese company only helped itself gain further access to the overseas market. The existing strategic partnership between Formosa Epitaxy and Mitsui, in essence, allows the former to achieve a more focused products line, in the process avoiding any unnecessary price wars. Through its role as an OEM, there's a chance that Formosa Epitaxy will also one day be able play a major role within the Chinese market's LED supply chains.
Diagram Outlining Relationship between Formosa Epitaxy and Mitsui
Aside from Formosa Epitaxy, other chip manufacturers from within Taiwan’s LED industry are seeking to form their own strategic partnerships. With its cross licensing agreement with Toshiba involving the AlGaLnP LED patent, along with the pre-existing partnership with Toyoda Gosei, Epistar has been able to enter into Japan’s LED market and become an effective vendor within the country. Tekcore, on the other hand, is enjoying stable shipments and revenue now that it has handed operations over to Everlight’s CEO, Yeh Yin Fu.
LEDinside believes that the biggest challenges facing chip manufacturers is not that chip prices are dropping at a rate significantly faster than production growth– a trend which has made the market performances better in 2012 than in 2011– but that the rapidly dropping prices is causing revenue to either stay flat or to increase in miniscule portions. In order to maintain decent profits levels, manufacturers plan to release low Vf LED chip products that show better C/P ratio and reliability.
LED Packaged Manufacturers Actively Turning to the Lighting Application Market
For this October, the overall revenue for listed LED Package manufacturers remained stable and reached to NT $ 5.367 billion (MoM +0.42%, YoY+21.7%). With the retail situation for traditional lamp components returning to normal, Everlight saw steady shipment orders for Key Pad and Flash lights, and has been able to maintain its utilization rate at around 70 to 80%. Order visibility is about one month, and is likely to stay at the same level as the third quarter. For Lite-on Technology, October revenue for LED components is 6 times larger than it was during the same period of last year, thanks in part to the demand from global branded clients and expansions of the shipments. The LED product revenues, overall, is approximately 40% higher than it was last year.
In the LED backlight department, Lextar is currently getting ready to release its direct- type light bar for the 32~40 inch entry TV model and the 50~65 inch premium TV model. For lighting applications, other than the steadily rising LED component shipments, LED tube light shipments within the Japanese market has been persisting throughout October. The LED display panels shipment, on the other hand, has been slightly dropping due to the economic situation in Europe.
