LCD panel makers cutting small- to medium-size output amid weakening demand

Susie Pan, Taipei; Rodney Chan, DIGITIMES [Wednesday 9 July 2008]

LCD panel makers, including Chi Mei Optoelectronics (CMO), are reducing their output for the small- to medium-size segment as demand continues weakening, according to industry sources.

CMO saw its June shipments to the small- to medium-size segment decrease 35% sequentially to 4.89 million units chiefly because of weak demand from China's white box handset market. CMO supplies small- to medium-size panels to its own LCD module (LCM) subsidiary Chi Hsin Electronics and other LCM makers.

While CMO is cutting the volume of production for the small- to medium-size segment, Chunghwa Picture Tubes and HannStar Display are shifting more of their small- to medium-size capacities to processing monitor and low-cost notebook applications.

CPT has yet to announce its small- to medium-size shipments for June, but it has disclosed the volume is comparable to that for May. The company shipped 2.54 million units to the segment in May, which means CPT's second-quarter shipments to the segment will only total 9-10 million units, falling far short of its goal of 14 million units.

For HannStar, it had expected its output of medium-size panels to grow sharply after starting processing them at its 5G facilities. But its second-quarter shipments of medium-size panels totaled only 1.98 million units, failing to reach its goal. HannStar has remarked that it will adjust its output for the medium-size segment in line with the market situation.

Small-size panel supplier TPO Displays said its orders remain stable although utilization has dropped to 90%. While the company's utilization once plunged to 40% in early 2007 when the panel industry was in the doldrums, TPO said this time its utilization will not fall as steeply.

Giantplus Technology's utilization for small-size panels has also declined to 90%, the industry sources said.

The sources said small-size panel suppliers that only have 3 or 3.5G lines are first cutting output of LCMs, which are usually customized products for specific clients. The makers would not make customized LCMs in anticipation of clients' orders to prevent inventoriy from piling up, the sources added.