Everlight has received downgrade from “twA-” to “twBBB+” estimated by Taiwan Ratings Corp, which reflecting concerns about the balance sheet of the country’s biggest LED chip packager over the next one to two years amid negative market conditions.

Taiwan Ratings said in a statement that, “The downgrade reflects our view of the heightened industry risk in the global LED sector and our belief that Everlight’s profitability is unlikely to recover to the previous high over the next one to two years, due to prolonged oversupply from weak demand and increasing competition.”

“This is due to a weak global economy that has lowered LED TV demand as well as still-low demand for LED lighting,” Taiwan Ratings said, adding that industry oversupply by Chinese and South Korean firms would continue to place pressure on the industry.

For the three months through last month, Everlight posted NT$4.31 billion (US$143.8 million) in revenue, up 15.08 percent from the previous three months — but that was still 3.89 percent lower from a year earlier.

Despite the company’s improvements in cost structure and production efficiency, Everlight’s earnings before interest, taxes, depreciation and amortization would likely fall further in the next two years from 14.4 percent in the first quarter, the agency said.