Price Decline of LED Chip Gives the PSS Industry a Hard Time

Stocks of Taiwanese pattern sapphire substrate (PSS) providers, including Crystalwise, Rigitech Microelectronics, and Acme Electronics, lately witness a noticeable hike.

(Image: Crystalwise)

Operations of those companies slowly recovered after a recession in the PSS industry, while small-sized firms bottomed out. Rigidtech has made adjustments to its capacity, controlling its production to maintain the cost and efficiency. The solutions supported Rigitech through the hard time, pushing its revenue back up to NTD 165 million (USD 5.64 million), whereas the company needs more for a turnaround.

Crystalwise reported a loss per share of NTD 1.89 for 1Q17-3Q17, better than that in 2016. The company plans to adjust its equipment for the production of 6-inch PSS in hope to reduce the cost and enhance its competitiveness. In addition, Crystalwise expected Mini LED will drive the demand for those substrates.

Roger Chu, Research Director of LEDinside, said the price of LED chip is still affected by the price war heated up by new capacity of blue LED chips. That also makes the PSS providers struggle to raise prices of their products. Rigidtech and Crystalwise are not able to boost their revenues by raising product prices. Instead, they can only bring down costs to earn profits.

The price of PSS once saw a small degree of increase in 1H17, but no more growth has been witnessed since then. Chu said that the hard time for the whole PSS industry has not ended yet. Operations of those companies is less likely to see significant improvement as the price of LED chip will continue to decrease. Apart from small-sized firms in Taiwan, Japan-based Sumitomo Chemical also phased out the production of PSS and shifted its focus on manufacturing substrates for wireless communication.

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