Taiwanese LED chip manufacturer Epistar saw earnings turn to losses in 3Q13, due to loss on valuation of financial liability. Although, the company’s gross profit rebound rate was much lower than expected in 2013, higher gross profits from Embedded LED chip (ELC) and AlInGap products will help gross profits return to 17.8 percent levels, CLSA forecasted.
CLSA’s optimistic forecast of Epistar’s AlInGap products is based on the upcoming 2014 World Cup, which is expected to spur outdoor display demands. In addition, growing automotive lighting demands are expected to stimulate AlInGap sales performance next year. It is estimated AlInGap LED products gross profits will reach 36 percent in 2013. By 2014, AlInGaP sales performance is expected to further surge 38 percent and account for 31 percent of total revenue, according to CLSA projections. In addition, accompanying ELC product launch, the company’s InGaN LED products gross profits are expected to grow nine percent.
On the other hand, CLSA estimated global first tier lighting manufacturers 25W equiv. LED and 40W equiv. LED bulbs will drop from US$ 8-9 to US$ 6, due to lowered production costs. First tier manufacturers faster launch of LED bulbs is expected to spur outsourcing demands for LED chip manufacturing. The financial institute highlighted Epistar as the main beneficiary of the surging outsource demands, and entry into Philips, Osram, Cree, GE and IKEA supply chains.