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TrendForce：Offseason Effect in 4Q12, Drives Taiwanese Vendors towards Bidding Market
According to LEDinside, the LED research division of TrendForce, Taiwanese listed LED manufacturers posted a total revenue of NT$6,917 million (MoM-14.8%, YoY+5.1%) as of December, 2012. As the fourth quarter is the traditional offseason, and branded TV vendors delayed the replenishment of their stocks, LED manufacturers’ fourth-quarter revenue was put to the test. Affected by the offseason effect in the LED backlight market, many Taiwanese LED manufacturers started to set eyes on the LED bidding market such as bulbs and street lights. However, in the face of keen competition in the market, most vendors have aggressively reduced their prices to win the bid, further dampening Taiwanese LED manufacturers’ profitability.
From February, 2013, the Taiwanese government will launch a two-stage LED bulb subsidy program targeting 220,000 mid- and low-income households as well as social welfare organizations. The government will plan a NT$230 million budget for purchasing 500,000 bulbs and for administration expenses. The program has attracted furious bidding from vendors. Winners of the bid must deliver the first shipment in 21 days, followed by another shipment of the rest 465,000 bulbs in the next 46 days. Therefore, bidders have started to replenish their stocks. As a result, the first quarter of 2013 is expected to see a large amount of inventory entering the market, and affect the existing price and quality of LED bulbs. LEDinside suggests that, apart from lowering product prices, Taiwanese vendors should place equal emphasis on product quality and sales support during the promotion of LED products. Only by enhancing consumers’ understanding of LED products and building up their confidence in the products with clear product specifications can the LED market gain sustainable growth momentum.
Taiwan’s Bureau of Energy under Ministry of Economic Affairs (MOEA) has planned a LED streetlight installation project which will invest NT$2 billion to replace 250,000 existing mercury streetlights with LED streetlights between 2013 and 2014. The awarding of the project will be based on the most advantageous bid; that is, bidders using Taiwanese makers’ chips, LED components, power supplies, and heat sinks, will have the upper hand. However, even if the bidders manage to win the bid by lowering prices, their profits may be offset by future maintenance and warranty costs. Hence, the current winners of the bids are mainly listed companies including Leotek Electronics, Everlight Electronics, and Delta Electronics.
Infrared Products and New LED Specifications for Tablet PCs and Mobile Phones Ensuring Stable Revenue for LED Chip And Package Manufacturers
Influenced by a slowdown in chip market growth and a reduction in replenishment demand, Taiwanese listed LED chip vendors’ revenue regressed to NT$2,650 million (MoM-17.9%, YoY-1.2%) in December, 2012. TEopto, the joint venture between Epistar and Toyota Gosei, has unveiled various LED chips for Mobiles and tablet PCs markets. Epistar has also benefited from increased infrared product orders, which contributes to a fairly stable revenue stream and gross margins for the company. Forepi has successfully become Sharp’s supplier by signing a cross-licensing agreement with Toyota Gosei, and is expected to receive new orders from Japanese illumination and backlight customers in 2013. Epileds is another company that has benefited from infrared LED products.
Taiwanese listed LED package manufacturers’ revenue reached NT$4,270 million as of December 2012 (MoM-12.74%, YoY+9.4%). Benefiting from infrared LED orders, Everlight Electronics saw stable revenue at NT$1,330 million. Lextar, which enjoyed growth in its LED backlight products for smartphones, has shipped its COB (Chip On Board) products for European luminaire manufacturers. The company’s LED panel lights have also been delivered on schedule.
Influenced by the traditional offseason effect in the fourth quarter, Taiwanese high brightness LED product failed to meet requirement sales performance in the backlight and lighting markets. However, with the launch of the Taiwanese government’s bidding projects and LED bulb subsidy programs, coupled with demand from the end market that will benefit Taiwanese LED chip and package manufacturers, LEDinside expects 2013 to be a prosperous year for Taiwanese LED vendors.
