8 July 2011

SemiLEDs’ quarterly revenue drops a further 43%

For its fiscal third-quarter 2011 (to end May), LED chip and component maker SemiLEDs Corp of Boise, ID, USA (which has chip fabrication facilities in Hsinchu Science Park, Taiwan) has reported revenue of $5.6m, down 43% on $9.96m last quarter and $9.9m a year ago, and below the expected $6–7m.

“Pricing pressure and end-demand weakness continued from the fiscal second quarter [when revenue dropped 23% sequentially from fiscal Q1's $13m],” says chairman & CEO Trung Doan. “However, we are seeing pricing stabilize,” he adds.

Founded in 2005, SemiLEDs’ manufactures proprietary blue, green and ultraviolet (UV) LED chips for sale mainly to chip-packaging customers in China, Taiwan and other parts of Asia such as Korea, or to distributors who sell to packagers. It also packages some of its chips into LED components for sale to distributors and end-customers in selected markets (mainly for general lighting applications, including street lights and commercial, industrial and residential lighting).

Gross margin has fallen further, from 51% a year ago and 23% last quarter to just 9% (in contrast to the expected rebound to 25–30%). Operating margin was –70%, compared with –6% last quarter and +36% a year ago. However, margins were negatively impacted by a charge of $1.1m for the write-downs of inventory.

On a non-GAAP basis, net loss was $4.3m, up from $0.74m last quarter and compared with net income of $3.3m a year ago. Cash used in operations was $3.3m. During the quarter, cash and cash equivalents fell from $102.6m to $94.4m.

On 9 December SemiLEDs completed its initial public offering, generating net proceeds of $95.5m for expanding production capacity in Taiwan, R&D expenses related to LED chip production based on 6” wafers, and general corporate purposes (including working capital and capital expenditure). The firm has built additional capacity through an LED chip-making joint-venture China SemiLEDs (Xurui Guangdian Co Ltd) formed in January 2010 in Foshan, Guangdong Province. However, after opening trading on NASDAQ at $24.01 (41% above the $17 IPO price), the firm’s share price has slumped to $6–7m in recent weeks. 

“We remain focused on improving our cost structure by accelerating our efforts to transition to 4-inch wafer production at our Taiwan facility, continuing to ramp 4-inch production volume at China SemiLEDs, as well as supporting our customers to maximize the benefits of our metal vertical chip structures to reduce the total cost of ownership,” says Doan. The firm’s metal vertical photon (MvpLED) chip design features a vertical LED structure on a patented copper alloy base (after removal of the sapphire substrate) that provides what is claimed to be the best thermal resistance on the market — allowing better heat removal than for LEDs that retain the sapphire substrate — as well as electrical and optical advantages such as greater luminous efficacy and longer lumen maintenance.

For its fiscal fourth-quarter 2011 (to end-August), SemiLEDs expects revenue of $5.5–6.5m. Gross margin is expected to be negative.

See related items:

SemiLEDs revenue drops due to pricing pressure

SemiLEDs’ revenue almost doubles year-on-year

Tags: SemiLEDs

Visit: www.semileds.com

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