Panel inventory adjustment to influence performance of package manufacturers

TAIWAN: Based on the industry researcher LEDinside’s analysis and statistics, in July this year, listed LED manufacturers in Taiwan have total revenue of 10.853 billion NTD, a 2.7 percent growth compared with June revenue of 10.56 billion NTD and 80 percent rise YoY.

The revenue for LED chip manufacturers in July reached 4.97 billion NTD, up 7.6 percent from June. The revenue for LED package manufacturers in July amounted to 5.88 billion NTD, down 1.1 percent from June.Compiled by LEDinside, LED index (LEDX) observes the industry through the performance of the LED industry market value. Currently, LED epitaxy index (Chip LEDX) has dropped to 3,833 points, while the LED package index (Package LEDX) has come to 4,955 points.

Although the production value of Taiwan's LED manufacturers continues to hit monthly record high, the LED index has slumped almost 20% of its high point, compared to that of early this year, which has gone against the fundamental. Evident from the index, most investors are negative about the market in light of the recent inventory adjustment by Korean customers and price competition driven by international TV brands.

Taiwan's overall revenue of chip manufacturers observed in July soared 86 percent on yearly base. Most epitaxy manufacturers continued to make record high revenue because of ongoing introduction of MOCVD systems. Epistar generated revenue of 1.902 billion NTD in July while Tekcore and Genesis Photonics also had significant growth in July revenue due to the contribution of TV backlight orders.

Besides, global LED epitaxy manufacturers have greatly expanded production capacity since last year as is reflected in the recent Q2 earnings release by Aixtron and Veeco, the two global leading LED equipment manufacturers.

Aixtron had revenue of 198 million Euro (+ 24 percent QoQ) for Q2 and its equipment orders amounted to 175 million Euro (+4 percent QoQ), followed closely by Veeco with Q2 revenue of $253 million (+55 percent QoQ).

The overall equipment orders received by Aixtron and Veeco this year have exceeded 600~700 units. In particular, promoted by subsidy policies from Chinese local governments, China will witness the greatest MOCVD system increase of the world in next two years. Moreover, the rising capital expenditure in China will also boost the development of peripheral equipments like the prober and sorter, even the need of upstream raw materials, for example, the sapphire substrate and MO source.

In view of downstream LED package manufacturers, Everlight still led the LED Industry with 1.72 billion NTD in revenue for July. However, from the revenue observation of LED package manufacturers, some manufacturers have been slightly affected by the slack NB demand and high panel inventory.

As the short-term inventory adjustment in backlight market will slow down the growth momentum of package manufacturers, the whole industry is watching when the lighting market will prop up the demand.

Cree also announced its April-to -June earnings report lately: Q2 revenue at $265 million (+13 percent QoQ), gross profits as high as 50 percent, net profit to 52 million NTD and EPS at 0.48 (GAAP). It made an outstanding performance in both revenue and profits.It is expected that the backlight market slackness will be offset by Q3 lighting demand and the revenue will have 2-6 percent growth space.