SEMILEDS CORPORATION (LEDS) Insiders Own 52%; Stock Trades at 54% of Book Value

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1 (PENNY STOCK WEEKLY) - DEC. 22, 2014 LEDS continues to soar from its October oversold condition and all-time low of $0.37, as an additional 21.26% gain for the week was added to an already-stellar performance in December, during which the stock s price settled only two pennies short of a two-bagger gain for the month. With less than a week left of trading in 2014, LEDS could continue to get a bid as we move into the month of January, when Wall Street anticipates the so-called January Effect and further gains in those stocks that have traded higher during the fourth quarter.

2 We also alert traders to LEDS decisive breakout of its trading range of $0.40 and $0.55 during a time of the stock s very low valuation metrics. In addition, we suggest that the recent run-up in the stock from the October lows was most likely catalyzed by investors familiar with the potential of SemiLEDS newest line of white chip scale packages, ReadyMount Enhanced Chip Scale Package (CSP), or EC Series, which recently was chosen in September as one of EDN s Hot 100 Products of Of the many thousands of products announced during the past year, the EDN Hot 100 are the products that especially caught the attention of our editors and readers, says Rich Pell, Executive and Chief Technical Editor at professional engineering publication, EDN. We are pleased to share the tradition of showcasing these technologies as we celebrate the 21 st anniversary of this program. ABOUT SemiLEDS develops, manufactures and sells LED chips and LED components. The company s products are used primarily for general lighting applications, including street lights and commercial, industrial and residential lighting. Its LED chips may also be used in specialty industrial applications, such as ultraviolet, or UV, curing of polymers, LED light therapy in medical/cosmetic applications, counterfeit detection, LED lighting for horticulture applications, architectural lighting and entertainment lighting. As the LED industry suffers from oversupply - casting downward pressure on the entire industry s bottom line - investors are betting that SemiLEDS revenue performance will buck the industry trend next year with the introduction of the evolutionary promise of ReadyMount.

3 ReadyMount, SemiLEDS new LED packaging option, is expected to attract light-engine and luminaire manufacturers to the company s more flexible and cost-effective alternative to package die solutions offered by the big-four dominants of the LED market, Cree, Nichia, OSRAM Opto Semiconductors, and Philips Lumileds Lighting. We believe SemiLEDS has possibly struck a blow to the big-four LED makers at a time when Solid-State Lighting (SSL) equipment makers struggle to gain an upper hand in a market dominated by this handful of sluggish, unresponsive and cartel-ish suppliers, whose patents and legal personnel have historically eliminated other would-be interlopers. The ReadyMount white chip scale LED is SemiLEDS latest innovation in LED technology which promises to increase product reliability, dramatically reduce manufacturing costs, and increase lumens output. By combining SemiLEDS enhanced chip-scale (EC) packaging technique with the company s ReadyWhite phosphor technology, SSL manufacturers will be able to assemble products without the need to alter their existing surface-mount technology (SMT) machines, according to EDN. The ReadyMount package comes with design enhancements that include: rear contacts to unobstruct the surface of the diode, as well as an EC packaging option that eliminates the need to wire bond as part of the installation. [We] suspect that the improved reliability is due in good part to eliminating the need for customers to do their own wire bonding, the manufacturing step with the greatest potential for introducing defects in any assembly process, states EDN. It also avoids the possibility of a customer's machine introducing excessive mechanical stresses which could impair the performance of the unusual photon injection elements embedded within the equally unusual structure of these LEDs which include a copper

4 alloy backing that provides mechanical support (and a great thermal junction) after they're separated from the sapphire substrate they're fabricated on. With an input of 3 watts, the EC package can be affixed to chip-on-board applications - a standard design configuration for the production of lighting products and flashlights - and be arranged in clusters or tight rows to affect an intense lighting density, at a cost of half of competing products. In all, ReadyMount offer[s] new options for designers, more lumens/$, EDN concluded. CONCLUSION We believe that SemiLEDS is a company for investors willing to deploy risk capital in a pure play within the LED space. The company s tiny market capitalization of $23.45 million reflects, in our opinion, a threshold level of rather high market pessimism of its future, though recently the stock has had even lower sentiment readings, dropping as low as a Price/Book of 0.25 in October. With oil prices falling precipitously since the late summer, stocks related to, or dependent upon, the cost of energy have been hit hard, with low-caps stocks taking the brunt of the sell-off throughout the energy complex. We expect the oil price to again climb next year, as marginal high-cost production from U.S. fracking and tar oil projects remove excess global supply. In addition, production from Libya - with the country s rapid rise to 900,000 barrels-per-day production spooking the oil longs - will always remain as a wild card to the geopolitics of global oil production capacity. However, in the midst of the oil bear market since the summer, and panic of recent weeks, LEDS has instead exhibited an uncorrelated trade to the oil price since October, coinciding with the

5 good publicity of SemiLEDS ReadyMount white chip scale LED in professional journals. Unfortunately, there is no means of accurately forecasting potential revenue to SemiLEDS from ReadyMount, but global revenue generated from LED sales was $2.7 billion in 2013, and expected to grow rapidly through to the next decade. By 2021, Navigant Research expects global LED sales could reach as high as $25 billion, or a 32.1% CAGR, an astounding compound annual growth rate, especially during a forecast of a slow-growth global economic environment. The rise of LED technology will transform every part of the commercial lighting industry, says Jesse Foote, research analyst at Navigant Research. While other lighting technologies have limited potential for future improvements, new designs for LEDs that push quality and efficacy to new levels continue to emerge from lighting labs around the world. To improve stockholder value, SemiLEDS must continue to innovate during the industry s rapid growth, as the company has already demonstrated with the introduction of ReadyMount. We also are thrilled with management s 52% stake (highest we ve seen) in the company s stock. In our opinion, SemiLEADS products, patents and engineering team are not accurately reflected in the market value of the company at this time. DEPARTMENT OF ENERGY STATISTICS According to the Department of Energy (DOE), Office of Energy Efficiency and Renewable Energy, LED lighting is expected to reach 36% of electricity revenue by 2020, and 74% by By 2030, LEDs are anticipated to save approximately 300 terawatt-hours of electricity, equating to approximately $30 billion per year, or enough electricity to power 24 million homes.