By Walter Borden
Light Emitting Diode (LED) demand continued in the first Quarter of 2014. LED fab utilisation rates have improved to high levels and LED adoption is happening faster than many had expected. LED customers are also reporting increased market demand for LED backlighting products. Many leading customers are placing orders for capacity expansions. Across the industry Q1 was a significant improvement over the last quarter of 2013 with higher revenues, better margins, and falling operating costs. Our work with privately held early stage start-up firms echoes what we hear from publicly trading firms and their coverage by leading analysts.
- We believe that higher LED consumer usage combined with new and lower cost products, cost reductions, and higher factory utilization will help increase LED usage in residential and commercial real estate.
- Unfortunately, stock prices in the sector generally have increased much more rapidly than earnings so investors may want to wait for a dip before entering the public market for LED stocks.
A look at Phillips N.V. is instructive. The Dutch conglomerate has reported flat earnings and generally lackluster revenue growth in the Q1 of 2014 with one exception. At Lighting, while sales were flat on a comparable basis, LED-based sales climbed 37 percent, and now represent 33 percent of total Lighting sales for the Dutch conglomerate.
Notably, then, Phillips had a flat quarter while its LED unit continued to outperform rising 37% in the first Quarter of 2014.
Meanwhile LED and Solar Panel Manufacturer Veeco saw healthy increases in revenue, gross profit, operating and net income in Q1 2014. Continue reading LED Sector Q1 2014 Performance