In 2016, Epistar lead the Taiwan LED industry business model transition from unprofitable product portfolio to refocusing on more profitable client orders. Other LED companies have caught onto this trend, such as Unity Opto, which slashed LED bulb production capacity by 70%, reported China Times.

Even Genesis Photonics Inc. (GPI) abandoned the highly competitive and low priced lighting market, where prices have continued to spiral. As it becomes more difficult for Taiwanese LED companies to compete against Chinese manufacturers in the LED lighting sector, GPI cut its lighting products resulting in sharp revenue share decline. Yet, the reduction is still insufficient. GPI announced as of October 2016 it will completely withdraw from the low priced LED lighting market, which includes LED bulbs, LED tubes, in turn it will focus on high end CSP LED, flip chip and other high end products.

GPI will continue to review its product line and readjust to optimize the product portfolio, a situation that also occurred in the traditional TV backlight sector. The next step for GPI is restructuring its TV backlight product line and cutting down on LED products for TV backlight applications.

Apple will be introducing CSP LED into its smartphone flash lights. Industry insiders project CSP LEDs will proliferate in high end flagship smartphones, hence GPI upheld an optimistic outlook for CSP LEDs, flip chips and other high end LED applications. GPI’s approach in the LED market prioritized automotive LED lights, smartphone flash lights, which is different from Epistar’s focal on TV backlight. GPI entered China’s automotive lighting industry through Chicony Electronics, and GPI’s automotive LEDs are in the design in phase which is expected to improve its future revenues.

For a same sized EPI-wafer, CSP LEDs and flip chip LEDs production costs are nearly double or triple the price of traditional LED chips, the industry estimated. Overall prices are further slashed by reducing packaging costs, and even low to mid-range TVs are starting to employ CSP LEDs. Moreover, Apple’s adaption of CSP LEDs in high end smartphone flash, and its pivotal role in urging adaptation of new technology in the industry, has led to LED chip manufacturers upbeat about outlook for CSP LEDs.

Chinese and Taiwanese LED manufacturers underwent major business transformations in 2016, the movement was headed by Epistar which abandoned low profit products, moved away from revenue spurts, and conservative MOCVD purchases. The company not only has implemented austerity measures, it has given up on price wars. In addition to GPI, LED package manufacturer Unity Opto has slashed LED bulb production capacity from 10 million bulbs per month to 3 million bulbs in fourth quarter of 2016.

The company’s LED bulb revenue share will also be halved to 10% in first quarter of 2017, much lower than 20% in fourth quarter. The lowered LED bulb revenue shares is projected to raise the company’s gross margin by 10% in 2017.