LEDinside: LED Makers Strived to Digest Inventories and Make Way into Lighting Market

According to LEDinside, a research division of TrendForce, the revenues of Taiwanese listed LED manufacturers totaled NT$ 7.434 billion (MoM-3.41%, YoY-11.3%). Most companies have made lowering their inventory levels the first priority. LEDinside’s survey finds that a lot of manufacturers’ days sales of inventory (DSI) are over three months. In light of the stagnant outlook, Taiwanese makers have been conservative about their expansion plans, and in the meantime aggressively increase their capacities of lighting product application. Aside from Taiwanese makers, global big names also put more accent on the lighting market. Eying the great potential of Japanese and Chinese markets, Nichia expanded its capacity with its capital expenditures in 2011 reaching US$ 900 million. Moreover, Panasonic plans to merge Panasonic Electric Works with Panasonic Lighting into a new lighting business unit in January, 2012 and launch 70 types of LED light bulbs and 3300 types of LED lighting fixture products in 2012. It is evident that gaining market share in the lighting market will give manufacturers edges over other competitors.

Revenues of LED Chip Makers
Propelled by the upswing in end-market demand, revenues of Taiwanese listed LED wafer foundries reached NT$ 3.16 billion in November (-3.8%MoM，-22.2%YoY). The LED TV sales and orders from Chinese and South Korean TV brand vendors stimulated by Chinese New Year holiday are expected to relieve the inventory pressure for LED chip manufacturers. Epistar’s revenue slightly increased (+2.7%MoM, -22.2%YoY), while FOREPI’s decreased slightly. Compared to chips produced by Chinese LED chip manufacturers, Taiwanese makers’ products are superior in terms of yield rate, cost management, luminous efficacy and color rendering index. Hence, Chinese companies begin to seek joint efforts with Taiwanese makers. In addition, due to the weak demand for AlGalnP LED, the revenues remained the same.

Revenues of Package Makers
The revenues of Taiwanese LED package makers in November hit NT$ 4.27 billion, with numbers on par with the same period in 2010 (MoM-3.11%, YoY-1.0%). Benefiting from the year-end construction tenders and the increased orders for IR LED products, Bright LED Electronics’s November revenue slightly rose (+7.8%MoM, -27.7%YoY). 4Q is the traditional slow season in European lighting market but a peak season for traditional household lighting in Asia, where LED tubes are in high demand and demands for industrial and commercial lighting are primarily concentrated in the white light product. Edison saw 2011 as the first year of LDMS era; the LM-80 certification will help the company make its way into the European and American markets. As for Japanese government’s budget plan 2012, it is based on not only post-disaster reconstruction but also the goal to build a smart city which incorporated electric vehicles, BIPV / BAPV and energy-saving facilities. LEDinside believes that with the plan being carried out, Japanese economy may experience a revival. In addition, Japanese lighting companies are also aggressively taking advantage of their group resources as large conglomerates to launch LED lighting solutions, in the hope of acquiring more construction projects.