Epistar Rebuts Reports Claiming it Laid Off 100 Employees

Taiwanese LED EPI-wafer manufacturer Epistar has vehemently denied claims made by local media Apple Daily that it had laid off more than 100 employees following the shut down of its subsidiary FOREPI’s EPI-wafer fab.

Epistar’s net loss from fourth quarter 2015 and first quarter of 2016 was respectively NT $1.96 billion (US $60 million) and NT $1.44 billion. Compared to fourth quarter of 2015, the company’s net loss was down NT$ 5.27 million. The Taiwanese company has switched its strategy to rapidly lower production costs and turnover losses.

The FOREPI EPI-wafer plant’s low utilization rate, high production costs, and the group’s strategy to concentrate production capacity were cited as main reasons. Epistar will terminate FOREPI’s EPI-wafer production, and depending on market demands transfer equipment from the fab to other factories to lower costs and spending.

The company is encouraging employees to transfer to other departments, or other businesses and subsidiaries. The current changes have not affected business operations much.

Citing international investment institutes projections that Epistar revenue will rebound, and increase about 10%-15%. The LED chip manufacturer responded it had not announced its financial predictions, and this was clearly media speculation.

An Epistar employee that leaked information to Apple Daily claimed, the group had offered FOREPI subsidiary employees unwilling to transfer to a new production site options of resignation or a severance package.

Epistar announced that the FOREPI subsidiary has about 30 MOCVDs, but only five are in production at its Longtan factory in Taoyuan County, Taiwan. The low utilization rates has led to very high production costs, resulting in the company’s decision to adjust and concentrate production in Hsinchu County.

FOREPI’s EPI-wafer engineers and technicians were assigned to other production sites, and the company was willing to provide shuttle buses to make commuting more convenient for employees traveling from Taoyuan to Hsinchu. As for those unwilling to transfer to new factories, Epistar is willing to give a severance package. About 90 employees will be affected by the company’s recent restructure.

Taiwan’s labor laws allows Epistar to downsize, and the layoff of employees and resulting complaints in the media reflects the current economy and changes in the industry has made it far more challenging for businesses and employees. There will always be unsatisfied employees, and it will be important for companies to implement business strategies to optimize shareholders benefits, and turn around losses. It will be a challenge for enterprises during the decision making process to also take into consideration employees emotions and livelihood.

[Editor's Note: First paragraph was edited on May 25, 2016.]

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