Wang Donglei: Elec-Tech Working Hard to Bridge Gap Between Ideal Profits and Reality (Part 2)

Elec-Tech Chariman Wang Donglei faced disgruntled investors during the company’s investor conference discussing the company’s 2013 annual financial results on May 12, 2014. Although ElecTech has made it into the LED supply chain, net profit growth has yet to be seen. Wang first discussed the benefits the company recived from their aquisition of NVC Lighitng. Wang next tackled questions by investors regarding wafer expansion. 

Elec-Tech faces wafer expansion dilemma 

“Every day I feel as though I am walking on thin ice, when I have to manage this company and face so many competitors,” said Wang in response to investor’s questions about chip production expansion. 

Elec-Tech is currently the only company producing 4-inch LED epitaxial wafers in the Asian-Pacific region. As of now, the company has 92 MOCVD equipment for 4-inch wafer production. After adjustments and deciding on the technical solution, Elec-Tech anticipates all MOCVD units will be capable of stable mass production in 2014. The company keeps a close eye on all new equipment developments and industry competitors in order to update or add new MOCVD units accordingly to maintain its competitive edge.

Elec-Tech’s first quarter fiscal 2014 financial report revealed that the company’s Wuhu and Yangzhou subsidiaries acquired a total of 92 MOCVDs. Out of these 52 units have entered mass production after completing adjustments and test trials, while six units are applied in R&D. The remaining are currently undergoing installment and debugging. 

Boom in wafer demand has happened earlier than anticipated, Elec-Tech is not fully prepared in MOCVD equipment and understaffed to meet the upcoming demand, said Wang. However, Wang assured investors that the company will strive to initiate all MOCVD units during the second half of this year if the wafer market continues to prosper. 

The LED industry is thriving and unlikely to end anytime soon, said Wang. The company intends to take advantage of the prospering industry, and not miss out on any opportunity. 

In terms of MOCVD production capacity, the company is faced with two problems. If it chooses to expand, there is a chance it will not be able to maintain its competitive position within the industry. However, if it does expand, there is a chance the company will follow the same disastrous road of overcapacity as other manufactures. Elec-Tech is still weighing the pros and cons and has yet to make a decision. It is not yet decided if the company will add any additional units to their current 92 MOCVD. 

Wang’s initial bold attitude changed slightly after an embarrassing incident earlier this year. During an interview on Jan. 15, 2014, Wang stated that the company anticipates LED industry revenue for itself and NVC Lighting to reach RMB 10 billion-12 billion (US $1.6 -1.9 billion) in 2014 and for Compound Annual Growth Rate (CAGR) to increase 150-200 percent over the next three years. 

The company then turned around and released a retraction on Jan. 20, 2014 saying that sales revenue for the two companies would not be RMB 10-12 billion as earlier stated, nor would CAGR reach 150-200 percent by 2016. 

After this information became public, investors began to wondering when the company would release more consistent news. “The SME board’s regulations are pretty strict,” complained Wang. 

Investors hoped that Wang would inform shareholders as to whether chip sales, LED lighting, or display industry would make significant breakthrough this year. “I need to first discuss with our secretary of the board before giving company performance future projections, in case I violate SME regulations,” said Wang. 

 

Read more: Wang Donglei: Elec-Tech Working Hard to Bridge Gap Between Ideal Profits and Reality (Part 1)

(Author: Amber Liu, Chief Editor, LEDinside Chinahttp:// Translator: Leah Allen, Editor, LEDinside)
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