The financial industry’s interest has obviously increased as the Taiwan LED industry recovers. Rising LED lighting market penetration rates will lead to improvements in Taiwan LED industry demand and supply situation resulting in overall industry growth. In turn, manufacturers’ better gross margin performances will also boost stockholders Return On Equity (ROE), according to a new LED market report by Barclays. The financial institute was especially optimistic about Taiwanese LED manufacturer Epistar’s performance this year.

The Taiwanese LED industry three fundamental fields will have positive developments in 2014, according to the report. This includes manufacturers easing MOCVD expansions and soaring lighting demands, which will alleviate the overall supply and demand situation in 2014. Taiwanese LED manufacturers have been rapidly expanded MOCVD equipments over the last two years. However, Barclays projected Taiwan’s LED industry’s supply and demand will not reach equilibrium till 2015.

In addition, advancements in LED technology and intense price competitions led industry insiders to previously believe LED bulb prices have reached the pricing sweet spot of US$ 10 in certain markets. However, Barclays analyzed in the next 12 months, LED bulb prices will drop 30 percent, and that 40W equiv. LED bulb prices will reach US$ 10 in 2014. Therefore, luminaire installation penetration rate will reach 30 to 40 percent in 2014. 

LED manufacturers OEM orders and component price trends will also improve. All these will affect stockholder’s overall ROE performance. In the long term, Taiwanese LED manufacturers still face competitive threats from Chinese manufacturers, pointed out Barclays. However, from 2014 to 2015 Taiwanese LED manufacturers profitability will rebound as the industry recovers.

Barclays was especially optimistic about Epistar’s performance. Epistar’s improvements in utilization rates and product portfolio will act as a momentum for rebounding gross margin in 2014, noted the financial institute. Furthermore, Epistar stockholder’s 2014 to 2015 ROE is expected to return to 6 percent.