LED firms may post better-than-expected sales in 4th quarter


TAIPEI — Local LED product suppliers could post better-than-expected sales in the fourth quarter, as China will reportedly unveil another round of subsidies on energy-efficient home appliance purchases soon, market analysts said Thursday. In addition, with China’s Oct. 1 National Day holiday approaching, Chinese LED product buyers could start to build up their inventories in a bid to meet an expected buying spree during the holiday, the analysts said. They added that such positive leads from China are expected to help local LED product manufacturers to offset the impact of slow-season effects traditionally seen during the October-December period. After China ended its last year-long program to provide subsidies on purchases on energy-efficient home appliances, including LED TVs, on May 31, demand for LED backlights has fallen sharply. As a result, it is unlikely that the LED business will benefit much from peak-season effects in the third quarter, the analysts said. According to the Industrial Economics and Knowledge Research Center (IEK), production value of Taiwan’s LED industry for the third quarter is expected to fall 4.9 percent from the second quarter to NT$24.5 billion (US$822 million), due largely to falling LED backlight demand. Among the local LED firms, only Everlight Electronics Co. outperformed its local peers to post a 10.14 percent month-on-month increase in consolidated sales for August to a new high of NT$2.41 billion. The market expects Everlight to enjoy a 10 percent sequential rise in consolidated sales for the third quarter.

New China Subsidy to Boost Demand for LED However, a new subsidy plan from China could spark demand for LED products again. According to a China Securities Journal report, the Chinese authorities will made public the new program in October. The report added that the plan is scheduled to kick off in January 2014. Ahead of the implementation of the new subsidy program, home appliance vendors are expected to restock their inventories in the fourth quarter, in expectation of a wave of strong buying starting from next year, the analysts said. Along with the new subsidy plan, the market widely expects China’s Oct. 1 National Day holiday to prompt many consumers there to shop, a development that could boost sales of LED products. LEDInside, an LED market research group in Taipei, said some Chinese TV vendors have resumed buying LED products for TV production in hopes that they can gain the upper hand in competition during the upcoming holiday. Meanwhile, with demand for LED backlights on the decline after China’s termination of its last subsidy program, many local LED firms have assigned more resources to LED lighting production, targeting buyers from the U.S. and European markets, the analysts said. A move to raise production of LED lighting is expected to maintain these local LED firms’ capacity utilization rates by making up for the losses in LED backlight orders, they said.