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18 January 2016

SemiLEDs' quarterly revenue falls a further 5%

For fiscal first-quarter 2016 (to end-November 2015), LED chip and component maker SemiLEDs Corp of Hsinchu, Taiwan has reported revenue of $3m, up 3.5% on $2.9m a year ago but down 5% on $3.1m last quarter.

Gross margin was negative 49%, better than negative 53% a year ago but worsening from negative 33% last quarter.

Operating expenses have been cut further, from $2.9m a year ago and $1.9m last quarter to $1.7m, due mainly to selling, general & administrative (SG&A) expenses falling further from $2.15m a year ago and $1.34m last quarter to $1.09m, while research and development (R&D) expenses have risen slightly from $0.49m to $0.6m (though still less than $0.75m a year ago). Despite this, operating margin has fallen back from negative 94% last quarter to negative 106% (though still better than negative 152% a year ago).

On a non-GAAP basis, net loss was $3.3m, better than $3.9m a year ago but worsening from $2.8m last quarter.

Cash used in operating activities was $0.6m, down from $2.7m a year ago but up slightly from $0.56m last quarter. Capital expenditure has risen slightly, from $275,000 last quarter to $341,000 (but still almost half the $0.6m a year ago). Hence, overall, free cash flow was negative $0.9m, worsening slightly from negative $0.87m last quarter (but still much less than the $3.3m a year ago). During fiscal 2015, cash and cash equivalents fell from $4.8m to $3.5m (compared with $8.7m a year ago).

"We are moving toward a fabless business model to focus on the less capital-intensive component business," says chairman, president & CEO Trung Doan. "This should help us to improve gross margin and lower capital spending and R&D expenses," he adds.

On 10 December, SemiLEDs entered into a Building Purchase Agreement to sell its headquarters for $5.2m. The sale is scheduled to close on 31 December 2017. SemiLEDs received a cash down-payment of $3m in December 2015. "This cash injection has provided us additional working capital to execute our fabless strategy," says Doan.

SemiLEDs also entered into a Foundry Services and Licensing Agreement (effective end-December 2015) with an ODM partner to assist with restructuring epiwafer and fab chip manufacturing operations at the firm's Chu-Nan site. "The ODM partner will work with us to ODM vertical chips for us using our vertical technology beginning in March," says Doan. "We expect to consign certain equipment and transfer a significant number of our employees related to the manufacturing of vertical LED chips to our ODM partner," he adds. "This partnership is expected to allow us have a steady source of LED chips with competitive and favorable price for our packaging business, expand our production capacity for LED components, and strengthen our product portfolio and technology." 

See related items:

SemiLEDs' operating efficiency improvements yield positive quarterly cash flow

SemiLEDs' recovery driven by new customers and design wins

SemiLEDs' quarterly revenue grows 29%

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