Inventory Adjustments Fuel LED Revenue Growth in Conventional Slack Season, says TrendForce

Market listed Taiwanese manufacturers saw an upward trend in March revenue as the number of work days return to normal and inventory distribution channel adjustments concluded. March revenue grew 24.1% to NT $11.73 billion (US $389.3 million). Taiwanese LED chip manufacturers saw an increase in revenue of 20.9% MoM to NT $4.57 billion. Revenue for Taiwanese LED package manufacturers likewise increased, with a 26.2% MoM rise to NT $7.16 billion. For the most part, Taiwanese LED manufacturers experienced revenue growth in 1Q14, with only Optotech and Ledtech showing a slight dip, observed LEDinside, a research subsidiary of TrendForce.

As the industry moved into 2Q14, average order visibility reached 1.5 months and production line utilization expansion continued. The oversupply situation in the LED industry slowed down, fueled by increased TV and mobile phone backlight applications and rising popularization of LED lighting products. 

Contrary to conventional slack season performance, LED revenue in 1Q14 experienced growth. LED manufacturers remained optimistic as the industry moved into peak season. LED lighting demand growth has rocketed, spurred by drop in product prices and ample government subsidies, said Jack Kuo, Assistant Manager of LEDinside. Replacement demand for LED luminaires in China and emerging markets remain strong at the moment. Taiwanese manufacturers, however, have turned away from the Chinese market due to fierce price cutting competition from domestic manufactures. Instead, Taiwanese manufacturers are increasingly beginning to look into Indonesian and other emerging markets. In terms of LED backlighting, with smartphone and tablet computer products maturing, LED specifications have changed very little and shipment growth has gradually eased. TV backlight felt the impact from the conclusion of Chinese government subsidies as well as by penetration rates closing in on 100%. Distribution channels had two quarters to clear out inventory, and only restarted stockups this January, driving 1Q14 LED backlight revenue.