Epistar to Raise InGaN LED Prices due to Uptick in Production Costs

Epistar, a leading Taiwanese LED chip maker, is to be the first manufacturer that raise the price of heavily-oversupplied InGaN LEDs. The company plans to raise up to 15% of the price in order to profit.

Epistar sent out the announcement of price adjustment in May, listing a number of reasons for price increase, including continuingly increased raw materials and staff costs. The company has reviewed the cost for production and planned to increased part of the LED chips’ prices in order to maintain balanced operation.

Rider Chang, the spokesman of Epistar, said that the price of InGaN LEDs were too low to cover the cost of production. In order to appropriately reflect on the cost while showing that the company value the stakeholder’s interest, the company has raised the price of some of its products for approximately 15%. The increase of the price, according to Chang, will lower the amount of the loss.

On the other hand, the downstream LED package manufacturers, including Everlight and Liteon that were once stakeholders of Epistar. Therefore the price were inevitably affected by these stakeholders. However, Epistar will have greater independence in prices in the future as Everlight and Liteon continued to sell their stake.

The price raise of Epistar also impacts Chinese LED makers. The price adjustment is not an across-board price increase but a price increase by product and specific items, said a manager of Epistar’s sole distributor in Chinese market, Luxlite. Overall the clients have not reacted to the price increase negatively.

Jiangsu Aucksun, a Chinese LED chips manufacturer, saw its LED chips production in full production capacity. The company’s 30 MOCVD is now fully booked for production. Jiangsu Aucksun currently has no plan for price increase. Still it’s possible corresponding price increase will be posed to products in the future.

A manager of China’s largest LED package manufacturer, Forest Lighting, also received price adjustment announcement in April. The price increase is actually tuning the price back to a reasonable position. In fact, Forest Lighting has raised the prices of its products in April. Forest Lighting has made preparation to Epistar’s price increase.

Epistar saw NT $1.43 billion (US $43.8 million) operating loss in 1Q16, which is less than that of 4Q15. Financial institutes estimated that Epistar may be able to profit upon raising prices.

(Editor's note: Headline edited as of 6:28 PM on  May 31, 2016.)

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