The rejuvenation of the LED market is unsurprisingly a hot topic in the investment market recently. Foreign investor’s interest in LED companies is gradually growing. In a recent report, Credit Suisse gave their outlook for Taiwanese LED chip manufacturer Epistar. The financial firm believes that is in a good position to ride on the general lighting demand growth and outgrow the market in the TV backlighting space due to their advantages in technologies and scale. However, the company will still be affected by seasonal factors with the upcoming Lunar New Year. The company’s 1Q14 revenues are expected to have a 10 percent QoQ decline.
Epistar is well-positioned in 2014 to ride on the general lighting demand growth and outgrow the market in the TV backlighting space, according to Credit Suisse. LED lighting penetration rate is anticipated to continue to increase, from 21% in 2013 to 29% in 2014 and 37% in 2015. The report states that although LED backlighting market penetration has matured, Epistar and other chip manufacturers will benefit from thin direct-type LED TVs demand for better LED chips. In addition, the company’s package free product ELC for backlighting and general lighting should help the profitability on higher ASP.
Due upcoming Lunar New Year and traditional slack season, 1Q14 is anticipated to be affected and see a decline of 10 percent from 4Q13. Operational revenue is estimated to rebound after March. Resulting from lower utilization during the first quarter compared to 4Q13, Credit Suisse believes that Epistar gross margin should decline.