LED plant Q1 average profit margin fell 3% to 6%

With the LED companies have announced the 2008 first quarter profit pressure in NTD appreciation, many LED companies either upstream or downstream manufacturers of epitaxial packaging industry are NT surge caused exchange loss, eroding some gross margin. In addition, sideview type of LED products used in the mobile phone market because the market demand is not strong and excess supply, ASP (the average price) fell by about 15%, so in 2008 Q1 Taiwan LED manufacturers average interest rate camp decline was 3% ~ 6%.

According to the LEDinside research shows that Taiwan LED vendors in the first quarter business interest rate performance is not ideal, compared to the upstream production of epitaxial chip manufacturers and downstream packaging manufacturers profitability (Figure-1), the camp interest rate in the first quarter compared to the fourth quarter of 2004 fell LED industry, upstream epitaxial manufacturers average Battalion increase rate is 10.6%. Compared to the fourth quarter of 2007 fell 6.1% compared to 16.7%. The average interest rate of downstream packaging manufacturers was 12.6%, compared with the 2007 fourth quarter of 15.3% fell by about 2.7%.

From the LED demand side analysis, in the LED application, the phone backlight applications consume nearly 30% of LED capacity. Therefore, mobile phone shipments for the supply and demand of the LED industry has a very important impact. According to dramexchange statistics, the first quarter of 2008, the overall global mobile phone shipments number about 289 million, compared to the fourth quarter of 2007 shipments of digital 336 million reduced by about 14%; but if the same period of 2007 (Q1) 253 million shipment size compared with the first quarter of this year, then hand machine market is still showing growth, annual growth the rate of more than 14%. Therefore, the negative impact of mobile phone shipments fell for the LED industry is still a traditional short quarter performance.

In addition, the first quarter of 2008, the digital photo frame DVD Player small and medium size products demand is expected if the strong demand is also the cause of the LED industry is one of the vibration. Since the second half of 2007, the shortage of small and medium size LCD panel is serious, so many consumer electronics industry for the various components of the double booking than the previous increase. When the size of the small and medium-sized panels after the lifting of the tight condition, the market demand is not as strong as expected, but also makes LED upstream and downstream manufacturers feel the pressure of oversupply. Overall LED demand growth is still not keep up with the LED output rate, so the first quarter LED industry ASP decline of about about 15%.

Despite the wide range of LED applications, emerging LED street lamp demand, LED NB backlight, etc., are the future long-term trend, but the LED in the NB and the lighting market penetration is still low. LED Street although the huge market demand, but in the short term there is still heat dissipation and high cost problems to overcome, and street lighting standards is not clear norms, so there are a long way to go.

Table 1: table LED upstream and downstream rate ratio table

Figure-1 Taiwan Companies Operation LED Margin

Source: LEDinside