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Ennostar to boost investment in Epistar for 150mm micro LED wafer capacity expansion

Ennostar will invest an additional NT$3.627 billion (US$122 million) in Epistar, its wholly owned subsidiaryin a few stages, with Epistar to use all of the additional paid-in capital to set up production capacity for 150mm micro LED epitaxial wafers, according to Ennostar.

Unikorn Semiconductor, a compound semiconductor maker spun off from Epistar, is currently responsible for production of small-size micro LED panels under the Ennostar Group. Unikorn has seen sales revenues from micro LED panels slightly exceed those from VCSEL and is developing next-generation micro LED panels for use in AR devices of smaller sizes, company chairman Wayne Shih noted.

Epistar has completed expansion of mini LED chip production capacity, but the capacity has not been fully utilized because demands for mini LED-backlit LCD TVs and large-size displays are lower than originally expected, company chairman Patrick Fan indicated.

COVID-19 lockdown in some Chinese cities greatly impacted Epistar's mini LED chip shipments in May and June 2022, but the impact has lessened since July, Fan said.

Epistar has participated in designing mini LED chips used in VR devices to track eyeballs. With fewer competitors, it is a business opportunity for Epitar, Fan noted.

Vertically-integrated LED maker Lextar Electronics, Ennostar's another wholly owned subsidiary, has supplied mini LED backlight units for supply chain makers of central information displays and dashboards for US and European automakers.

Ennostar posted consolidated revenues of NT$7.781 billion, gross margin of 22.81%, operating profit of NT$289.7 million and net profit of NT$388.7 million for the second quarter of 2022, leading to consolidated revenues of NT$16.327 billion, gross margin of 22.27%, operating profit of NT$819.8 million, net profit of NT$1.148 billion and net EPS of NT$1.68 for the first half of the year.

With second-quarter 2022 consolidated revenues hitting 5-quarter low, Ennostar expects third-quarter consolidated revenues to drop 6-9% quarterly and the corresponding gross margin and utilization of overall production capacities to decline a few percentage points.

Epistar has reported consolidated revenues of NT$1.468 billion for July, increasing 8.91% on month but decreasing 25.09% on year, and those of NT$12.067 billion for January-July, growing 8.56% on year.

For Lextar, consolidated revenues of NT$376.5 million for July slipped 2.42% on month and 44.24% on year and those of NT$3.049 billion for January-July dropped 25.56% on year.