Epistar Restructures Resources to Turn Around Losses

Affected by oversupply issues in the LED industry, leading Taiwanese LED EPI-wafer manufacturer Epistar (the company) lowered production costs by adjusting its production capacity and integrating subsidiaries FOREPI and Huga Optic resources, reported Taiwan media Apple Daily.

“By adjusting production capacity and integrating resources, Epistar aims to turn around losses by manufacturing products with higher profits,” said the company spokesperson Rider Chang.

Epistar’s strategy will be prioritizing the integration of its resources into a few production lines, bringing its second quarter revenue up 8% to NT $6.54 billion (US $204.27 million). Revenue growth is to continue since the LED industry will enter its peak season in third quarter, and the company’s capacity utilization rates increased.

Financial institutes in Taiwan projected Epistar will raise certain product prices by 10% to 40%, while eliminating depreciated machines to focus its resources on a few production lines. The Taiwanese LED company will have a chance to turn around financial losses in third quarter, but the general financial performance for 2016 will still be in the red. The company’s financial performance is not expected to improve till after 2017, following the launch of new products.

The industry in general upholds a positive outlook for IR LED applications in industrial and high power applications. Epistar prioritized AlInGaN LED developments and automotive lighting products in 2016, including for LED displays, automotive lighting, and IR LEDs, which will be its main revenue pillar for first half of 2016.

The company has 40 MOCVDs for AlInGaN production, and renovated some of its older blue LED equipment into AlInGaN to expand production while reducing equipment expenditure. It is expected following the equipments entry into production in third quarter, AlInGaN production will rise 20% to 30%.

After the company slashed blue LED production capacity by 25% in 2015, it reported 375 MOCVDs. Blue LED chip products comprise 70% to 80% of its revenue, following rebounding orders its utilization rates surpassed 90%. Financial institutes projected Epistar’s gross margins would return to double digits in third quarter.

Moreover, Epistar is actively developing new products for applications including daylight running lights (DRL) for automotive lighting market, which is estimated to be adapted by new car models in the supply chain by 2018.

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