Nichia sales hit by white LED price cuts

03 Feb 2006

Falling prices for white LEDs are blamed for Nichia's first sequential decrease in annual sales and profit since it launched its flagship blue LEDs.

Nichia, the world's leading LED manufacturer, is expected to report sales of ¥195 billion ($1.645 billion) for the fiscal year ended December 31, 2005, according to an article in the Japanese newspaper Nihon Keizai Shimbun.

If correct, the figure will represent a 5.5% decrease over the previous year's sales.

Nichia is also expected to report a fall in pre-tax profit of 17.6% to ¥78 billion, which would make 2005 the first year that both annual sales and profit have slipped since 1993, the year that the Japanese chip manufacturer launched its industry-changing blue LEDs.

While net profit is predicted to remain above ¥40 billion, it is likely to slip by more than 10% compared with fiscal 2004 when the firm earned ¥56 billion.

Although LED production ramped up strongly in 2006, a 30% annual fall in the price of white LEDs, of which Nichia is the dominant global producer, is being blamed for the sales decline.

Capital spending at the company continues apace, however, with Nichia using ¥35 billion for its new Naruto plant in Tokushima Prefecture, slated to come online in July, as well as for expanding its headquarters plant.

For fiscal 2006, sales are anticipated to climb to the ¥200 billion mark, while Nichia aims to post sales of ¥210 billion in fiscal 2008, says the report.