New Products Gross Profit to Play Major Role in Turning Forepi’s Loss into Profit in 2014

Forepi’s LED business hit rock bottom in 2013, said Jian Fengren, Chairman of Taiwanese LED chip manufacturer Forepi. However, the company will benefit from the gradual development of flip chip, HV LED, and package free products in 2014. The addition of injections from rebounding industrial demands will help the company reach its goal of turning the year’s loss into profit. With 10 consecutive quarters of loss, gross profit margin for the first three quarters is still -14.32 percent and legal persons believe improvements of gross profit margin in 2014  will be the key to turning loss into profit.

Demands are projected to rapidly increase in 2014 and carry on into 2015, said Jian during an interview. He believes that 2014 will not have a slack season and that revenue performance in 1Q14 will be better than 4Q13. Forepi has a chance to break even between May and June and turn loss into profit for the whole year.

Chip manufactures, including Forepi, made large scale investments in flip chip, HV LED, and package free technology in 2013 as these three technologies are what set Taiwanese manufacturers apart from their Chinese counterparts, explained Jian. The company’s goal for 2014 is to increase flip chip product revenue proportion by 15-20 percent and 10 percent for HV LED.

Gross profit margin performance is the key to whether or not the company will be able to reach their goal of turning loss into profit in 2014. The company’s gross profit margin for the first three quarters in 2013 was -14.32 percent. Lacking gross profit performance for large sized backlight and lighting product line is the main factor as to why the company could not improve gross profit performance in 2013. Conversely, gross profit margin performance for new mid to small sized backlight and flip chip products was much better. Therefore, the company’s ability to smoothly increase new product line shipment volumes in 2014 is influenced by gross profit and the entire profit performance.

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