SemiLEDs Corp SEC 10-K Report

SemiLEDs Corp, a company specializing in the design, development, and manufacturing of LED chips and components, has released its annual Form 10-K report. The report provides a comprehensive overview of the company's financial performance, business operations, strategic initiatives, and the challenges it faces in a highly competitive market.

Financial Highlights

Revenues, net: $43.009 million, reflecting a significant increase of 730% from the previous year, primarily driven by $38 million in sales from buy-sell purchase orders of equipment.

Gross profit: $2.431 million, representing 6% of revenues, a decrease from 20% in the prior year due to lower margins on buy-sell purchase orders.

Loss from operations: $(1.595) million, an improvement from a loss of $(2.949) million in the previous year, indicating better operational efficiency.

Net loss: $(1.130) million, compared to a net loss of $(2.031) million in the prior year, showing a reduction in overall losses.

Net loss per share attributable to SemiLEDs stockholders: $(0.15), improved from $(0.32) in the previous year, reflecting a decrease in net loss per share.

Business Highlights

Revenue Segments: The company generates revenue from LED chips, LED components, lighting products, and other revenues, with a significant portion of revenue in 2025 coming from buy-sell purchase orders of equipment.

Geographical Performance: The company's revenues are concentrated in a few select markets, including India, Japan, the Netherlands, and the United States, which collectively accounted for 97% of net revenues in 2025.

Sales Units: The company produces a variety of LED chips ranging in size and application, focusing on specialty industrial applications such as UV curing and medical/cosmetic uses.

New Product Launches: The company is developing new sensors for smartphones, smartwatches, and AR/VR glasses in collaboration with a Japanese partner, utilizing newly-developed wafer level package technology.

New Production Launches: The company is moving towards a fabless business model, utilizing foundry fabs to ODM their chips, which is expected to reduce idle capacity costs.

Future Outlook: The company plans to continue innovating in product design and manufacturing efficiencies, focusing on high-quality, flexible LED system solutions and expanding sales coverage in Asia.

Strategic Initiatives

Strategic Initiatives: The company is focusing on improving its financial position by implementing cost reduction programs and transforming into a profitable operation. This includes targeting niche markets, enhancing product offerings, and developing LED products for various applications. The company is also pursuing buy-sell purchase orders of equipment to improve gross margins and cash flows.

Capital Management: The company has engaged in several capital management activities, including the issuance of common stock to repay long-term loans and the conversion of convertible notes payable to common stock. It has also extended the maturity dates of loans with its Chairman and largest shareholder. The company has reduced its long-term debt from $3.7 million to $1.7 million as of August 31, 2025, and plans to issue additional equity to stockholders to further manage its capital needs.

Future Outlook: The company plans to continue its liquidity improvement efforts by raising additional cash through potential equity offerings, sales of assets, and/or issuance of debt. It aims to maintain financial flexibility by controlling capital costs and potentially decreasing activity levels and capital expenditures. The company expects to have sufficient liquidity to fund operations and capital expenditure plans for the next 12 months, assuming successful implementation of its liquidity plan.

Challenges and Risks

Financial Risks: The company has incurred net losses in recent periods and may require additional financing. If financing is not available, it may need to downsize or discontinue operations. The company also has a substantial accumulated deficit, raising doubts about its ability to continue as a going concern.

Market Risks: The company derives a significant portion of its revenue from buy-sell orders of equipment from China. Any disruption in these orders could negatively impact financial results. Additionally, the market for LEDs is highly volatile, with fluctuations in supply and demand posing serious risks.

Operational Risks: The company relies on contract manufacturers, which exposes it to risks such as reduced control over delivery schedules and quality assurance. The company also faces challenges in expanding its LED components business due to complex processes and technologies.

Regulatory Risks: The company is subject to complex trade and customs laws, and changes in these regulations could impact its ability to compete cost-effectively. The company also faces risks related to environmental laws due to the use of hazardous materials in its operations.

Geopolitical Risks: The company's operations are concentrated in Taiwan, making it vulnerable to natural disasters and political tensions between Taiwan and China, which could negatively affect its business.

Intellectual Property Risks: The company may face intellectual property infringement claims, which could result in costly litigation and affect its competitive position.

Management's Discussion and Analysis: Management has identified the need to implement a liquidity plan to address financial challenges. The company is focusing on product innovation and expanding its LED components business to improve its competitive position. However, the success of these strategies is uncertain, and failure to execute them effectively could have a material adverse effect on the business.

Market Risk Disclosures: The company is exposed to foreign currency exchange rate fluctuations, particularly between the U.S. dollar and the New Taiwan dollar. This exposure could adversely affect financial results, especially given the recent volatility in global currency exchange rates.

SEC Filing: SemiLEDs Corp [ LEDS ] - 10-K - Nov. 28, 2025