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Digitimes Research: Sanan-Formosa Epitaxy cooperation to benefit both firms Jessie Lin, DIGITIMES Research, Taipei [Thursday 15 November 2012]  China-based Sanan Optoelectronics recently announced it was buying up shares of Taiwan-based Formosa Epitaxy. Cooperation between the two firms can achieve benefits such as economies of scale. In 2012, Sanan has a total capacity of 144 MOCVD sets, and in particular, 22 units have been used to produce AlGaInP LED products, while the rest have been used to produce blue LED chips. Sanan plans to add 100 more units of MOCVD equipment and expects full capacity in 2014. After the equipment has been installed, and combining with Formosa Epitaxy's current capacity of 101 units, total capacity will be 345 units. In 2012, Epistar and related subsidiaries have had the largest capacity, at 334 units, of equipment among Taiwan- and China-based firms, and in particular, 284 units of equipment have been used to produce blue LED chips. Epistar plans to expand capacity to have a total capacity of 414 units of equipment in 2015. Sanan is China's largest LED chipmaker with total accumulated revenues from the first three quarters of 2012 reaching US$157 million, about 3.4 times more than Formosa Epitaxy's total accumulated revenues during the same period. Sanan maintained its gross margin around 12.2-24.8% in the first three quarters of 2012 while Formosa Epitaxy saw gross margin around negative 3.3-9.2% in the same period. The cooperation between Sanan and Formosa Epitaxy will benefit both firms in capacity and expanded customer base. Sanan has strong distribution channels in China and has been obtaining government LED street lamp projects and receiving LED lighting subsidies. Formosa Epitaxy can benefit from the cooperation by gaining access to the China market. Related stories: Commentary: Sanan financial report scandal stirs subsidy controversy (Apr 15) Epistar, Huga acquisition benefits to show in 2013 (Feb 6) Taiwan LED firms mixed about competition from China-based Sanan Optoelectronics (Jan 28) Epistar profit margin to rely on AlGaInP; Formosa Epitaxy likely to return to profitability in 3Q13 (Jan 24) LED lighting chips to see prices fall in 2013 (Jan 21) Epistar, Toyoda Gosei forms joint venture for China LED market (Jan 21) Unity Opto expects 1Q13 LED lighting packaging shipments to reach 200,000 units (Jan 9) Formosa Epitaxy expects 2013 China LED sales to account for 15-20% of total revenues, according to company chairman (Jan 4) Formosa Epitaxy plans to expand capacity in 2013 (Jan 2) Taiwan LED chipmakers unlikely to return to profitability in 2012 (Dec 12) Some Taiwan makers hold negative views on China-based Sanan investment in Formosa Epitaxy (Nov 14) China-based Sanan Optoelectronics to invest in Taiwan LED maker Formosa Epitaxy (Nov 12) China-based Sanan Optoelectronics poses threat to Taiwan-based LED chipmakers (Oct 31) Demand for backlights strong, lighting to see significant growth in 2013, say LED makers (Oct 17) Commentary: The pros and cons of China firms investing in Taiwan LED industry (Oct 16) Backlight demand for large-size products continues to be strong, says Epistar (Sep 19) Taiwan LED firms hope to install LED lighting in northeast China (Sep 13) Sanan showcases LED products at China optoelectronic expo (Sep 11) Formosa Epitaxy may enlist China investors (Sep 10) Unity Opto, Formosa Epitaxy see August revenues up on-month (Sep 6) Top |
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