Epistar Cuts Jobs as Part of Restructure Strategy

Taiwan’s LED industry was affected by China’s supply chain, even top LED chip manufacturer Epistar has announced plans of slashing jobs as part of its restructure process, reported UDN recently.

Epistar announced it will be undergoing the largest job cut since its establishment, and will be letting go of 65 jobs as part of its restructure process towards a flatter organizational structure.

Epistar President Dr. Ming Jiunn Jou recently spoke to Chinese-language media UDN about his outlook on LED industry developments. (Photo courtesy of Epistar)

Taiwan’s LED industry was affected by Chinese subsidies that has spurred price wars, and Philips low LED bulb pricing strategies unleashed in the U.S. market in May 2015 has pushed LED bulb prices down to $2.49 per bulb. LED industry’s low market performance is nothing new, starting from last week there has been market rumors that Epistar would be slashing several hundred jobs.

The job cuts were necessary to meet changes in client demands and sales, especially after Epistar underwent numerous acquisitions and mergers over the past years, said the company’s spokesperson Rider Chang.

The company did not layoff any employees during the height of the financial crisis in 2008, said Chang. However, the company incurred losses during 2Q15. Recent job cuts are not aimed at costdown, but on improving the company’s operation efficiency. Epistar’s net loss reached NT $122 million (US $3.75 million) during second quarter this year, and loss per share reached NT $0.11. For the first half of 2015, the company’s Earning per Share (EPS) was about NT $0.62.

The Southern Taiwan Science Park confirmed Epistar reported on Sept. 7, 2015, it will be cutting 65 jobs by Thursday this week as part of its restructure plan. Epistar’s two other LED factories in Hsinchu Science and Industrial Park and Central Taiwan Science Park have not submitted any notifications yet.

The company currently has 1,300 employees at its factory in Southern Taiwan Science Park, according to understanding. The company will be slashing 65 jobs, which is about 5% of its work force in the science park. Jobs laid off include workers on the production line, and even management positions.

Regarding rumors about the managers being laid off, Chang noted none of the high ranking managers were included in this wave of layoffs.

The company remained optimistic about developments in 2016, even after undergoing job cuts this year. The company believes Epistar will remain competitive and deliver better performance next year.

LEDs weak demands indicate there are plenty of opportunities next year, said Chang. LED lighting retail prices have dropped considerably this year, hence there will be significant growth in LED lighting next year. Prices remain less than ideal, though, hence it will be difficult for manufacturers to profit.

Epistar will be cooperating with LED package clients in China, and vertically integrate its production capacity. The company already has a fairly good market share. The company will be working on supplying LED chips solutions to clients to maximize differentiation and improve its profits.

Additionally, Epistar is prioritizing more profitable application segments including public infrastructures, architectures, landscaping and LED streetlights.

The global stock market crash has abnormally wiped out half of LED shares value, said Epistar President Ming Jiunn Jou. Despite the tough market conditions, the industry will be able to carve out a future path, he added. Epistar is focusing on MOCVD manufacturing, and other none-LED applications. LED manufacturers were impacted by Chinese supply chain, but the market is actively restructuring. After making these adjustments, LED manufacturers will be able to find their own path, but by then there will probably only be five to six LED manufacturers left in the global market.

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