15 April 2014

SemiLEDs' quarterly revenue rebounds by 22%, but losses still rising

For its fiscal second-quarter 2014 (to end-February), LED chip and component maker SemiLEDs Corp of Hsinchu, Taiwan has reported revenue of $4.2m, down 12.5% on $4.8m a year ago but rebounding by 22% from $3.4m last quarter.

Revenue from LED chips rose by 117% sequentially (jumping from 29% of total revenue last quarter to 51%). Revenue from LED components rose by 6% (falling from 34% to 30% of total revenue). Revenue from lighting products fell by 43% (dropping from 36% to 17% of total revenue).

“We are pleased with the sequential revenue growth we achieved in the quarter, however we continue to take actions to reduce our cost and lower our negative cash flow while reorienting the business toward more profitable and specialty segments of the industry, such as UV, entertainment and architecture,” says chairman, president & CEO Trung Doan.

Gross margin was negative 75%, worsening from negative 68% last quarter, due mainly to inventory write-downs as a result of increasing pressure on average selling prices (ASPs) for the firm’s LED chips plus excess capacity charges. Despite this, operating margin has improved slightly, from negative 179% last quarter to negative 159%. While R&D expenses remained steady at $1.1-1.2m, selling, general & administrative (SG&A) expenses have been cut further, from $2.6m last quarter to $2.3m, due mainly to reduced professional service expenses. Total operating expenses have hence fallen further, from $3.8m last quarter to $3.5m.

On a non-GAAP basis, net loss was $5.9m, up slightly from $5.8m last quarter (compared with the slight drop that was expected).

Cash used in operating activities has been cut from $5.4m last quarter to $4.2m. Despite capital expenditure almost doubling from $0.48m to $0.93m, total free cash outflow has been cut from $5.9m to $5.1m. During the quarter, cash and cash equivalents fell from $28.1m to $21.5m, following final payment of $443,000 in December on the purchase in fiscal Q4/2013 of an LED component production line and related products and technology (for which SemiLEDs had already made a partial payment of about $1.6m last quarter).

For fiscal third-quarter 2014, SemiLEDs expects revenue of $4.3-4.8m. Gross margin should remain negative, as production capacity will again not be fully utilized. Net loss is expected to rise again.

“With the recent acquisition of an LED packaging production line and associated new LED component products and technology now behind us, we expect to see greater contribution from component revenue in the quarters ahead,” says Doan. “Our packaged products carry higher ASPs and generally higher margins than our chip products which, as product mix changes over time, should drive higher overall corporate margins,” he notes.

In addition, in mid-March SemiLEDs announced its new EV-W series of white LED chips, which incorporate the firm’s proprietary ReadyWhite phosphor technology. “Our ReadyWhite technology delivers a highly uniform phosphor coating across the chip emitter surface, greatly increasing color precision and uniformity while eliminating the phosphor application from the packaging process,” says Doan. “As a result, the availability of high-output, high-consistency unpackaged white chips offers LED packaging and luminaire manufacturers a wide variety of new chip on board (COB) and package options,” he adds.

“As we continue to develop new innovative products and design wins in specialty markets such as UV applications, entertainment and architecture, we expect to grow our volumes, and improve our margins,” says Doan. “Taken in combination, we believe the new component product offerings, advances in phosphor technology through our ReadyWhite technology and our focus on specialty markets will improve our financial results.”

See related items:

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SemiLEDs’ revenue falls 23% quarter-to-quarter

Tags: SemiLEDs

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