Taiwanese Firms to See Stable Growth as Red LEDs Fuel Tailwind

Regarding the performance of LED industry in Taiwan, due to low season, demand for InGan (blue) LEDs has dropped in the first quarter, while that of AlINGap (red) LEDs is still strong. Thus, institutional investors estimate that business operations of LED manufacturers will significantly improve in the second quarter. For fiscal 2017, the overall industry profitability is expected to increase, and price competition in the blue LED segment will be less intense.

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According to Cathay Futures Corporation, a local consulting firm, in the face of decreased demand for general lighting products and backlight products, utilization rates of blue LED chips and package have lowered.

However, demand for red LEDs has been strong due to growing market interest in biometric recognition features on smartphones, RGB small pitch displays and IR LED security monitors. Cathay Futures Corporation estimates that in the second quarter when it is high season for electronic products, demand for LED backlights will rise, which will greatly benefit LED manufacturers.

As for the outlook for 2017, the corporation says demand for AlGaInP LEDs will continue to be boosted by applications such as small pitch displays, automotive lighting, IR night vision devices and iris scanners on smartphones. The overall industry profitability will thus improve, the corporation predicts.

Over the past year, LED industry in Taiwan has undergone transformation, and IR LED products have taken over 30% in the product portfolios of local manufacturers. As for blue LEDs, although Chinese manufactures continue to expand production capacity in both the upstream and downstream sectors, due to rising material costs and a decrease in government subsidies, price competition in this segment will be less fierce.

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