Downstream LED packaging houses have been operating with capacity utilization rates of 70-80%. In particular, Unity Opto indicated order visibility is clear through June and predicted second-quarter 2012 revenues to show growth above 50%. Upstream LED chipmakers have also been enjoying high capacity utilization rates. However, gross margin growth is likely to be flat.
Increasing demand for TV backlight units (BLUs) helped chipmakers to see rising capacity utilization rates in the first quarter. LED chipmakers noted full capacity will continue throughout the second quarter. Some firms have been transferring orders to OEM firms. Epistar began passing OEM orders to its subsidiary, Huge Optotech. Formosa Epitaxy has been passing some orders to its subsidiary in China. The market predicts revenue growth in the second quarter to reach above 20-30%.
Despite the current high capacity utilization rates of TV BLU makers, gross margins have been falling from above 20% to 15% in recent months. Compared to the 20% gross margin of LED lighting, increased sales of TV BLUs are not likely to help the firms generate significant profits.
Industry sources noted that sales of BLUs will be the main source of revenues in the second quarter.
Source: DigiTimes
