According to the first quarter performance forecast for 2014, except for Dehao Runda, listed LED epitaxial chip companies, which reported losses, Sanan Optoelectronics, Huacan Optoelectronics, Qianzhao Optoelectronics and Huacan Optoelectronics all made profits. Dehao Runda believes that the reason for the loss is on the one hand the decline in product gross profit margin and on the other hand the substantial increase in financial expenses. There are also differences in the number of companies that have forecasted profits compared with the same period last year. Sanan Optoelectronics, which has the largest increase in profit expectations, reported that strong market demand and the company's main production equipment MOCVD at full production are the reasons for the performance growth. Similarly, Nationstar Optoelectronics also attributed the performance growth to the increase in sales revenue, indicating that the increase in market demand is the main reason. Huacan Optoelectronics and Qianzhao Optoelectronics have lower performance expectations than the same period last year due to reduced non-main business income.
Although the revenue performance of LED chip companies in Taiwan, represented by Epistar, Canyuan, New Century, Dingyuan, Taigu, etc., varied in 2013, as the benchmark Epistar Optoelectronics turned from a loss to a profit, the industry as a whole showed a clear recovery trend. Entering the first quarter of 2014, continuing the upward trend at the end of 2013, the revenue performance of various chip companies continued to improve. Among them, the leading company Jingyuan Optoelectronics' revenue exceeded NT$6.2 billion, a year-on-year increase of 44%, and Dingyuan's growth rate was as high as 68%. Benefiting from the substantial increase in demand in the lighting market, more Taiwanese LED chip companies have entered the supply chain of major international TV manufacturers. As the penetration rate of LED backlight continues to increase, it has brought continuous orders to the companies. Therefore, in the first quarter of 2014, which is the traditional off-season for the industry, most companies have full production capacity, showing that the off-season is not slow, and their revenue performance has also continued to hit new highs. The second quarter has entered the traditional peak season for the industry, and various companies have stated that they will go all out to sprint for better performance. Among them, Jingyuan has added production capacity, New Century has increased the proportion of flip-chip chips, and Canyuan has adjusted its product line to increase the proportion of lighting chips. It is expected that in the second quarter, the main production equipment of each company, MOCVD, will be able to operate at full capacity, and revenue performance will also challenge new highs.
Judging from the development trend in the first half of 2014, my country's LED upstream chip technology will continue to improve and production capacity will be released at an accelerated pace. However, the performance of companies will be differentiated. The survival path of some small-scale chip companies with weak technical strength will become increasingly difficult, while the number of epitaxial chip companies will gradually decrease, concentration will further increase, and product prices will stabilize.
With the urgent need for energy conservation and emission reduction, LED will become the mainstream light source in the field of general lighting, and the demand for epitaxial chip products will also grow rapidly. However, judging from the first half of the year, the fierce competition in the chip segment will continue in 2014. The low gross profit margin in the mid- to low-end market will be difficult to change. The reality of the decline in the overall profitability of the industry cannot be ignored. Therefore, improving the technical level and scientifically adjusting the investment scale and product structure have become realistic choices for most epitaxial chip manufacturers.
The reporter learned during the interview that some domestic chip products have gradually approached the level of foreign brand companies in terms of technology and performance, reflecting high cost performance, but there is still room for further improvement in yield and performance stability, and this is also the main reason that determines the localization rate of chips. Some midstream packaging companies said that there is now a certain degree of recognition of localized chips, and the use of domestic brand chips is also the general trend.
ANNA