CPT lowers 2008 LCD panel shipment goal by 6%

Rebecca Kuo, Taipei; Rodney Chan, DIGITIMES [Wednesday 30 July 2008]

Chunghwa Picture Tubes (CPT) vice president Brian Lee told investors that the panel maker has lowered its large-size panel shipment goal by 6% for the year, in order to reflect weaker-than-expected demand in the LCD panel market, with reduction for various panel segments being in the 5-10% range.

For monitor panels, the original goal for 2008 was 19.2 million units, with 9.5 million units for the first half of the year and 9.7 million units for the second half. The revised goal is 17.9 million units for the entire year, with 9.4 million and 8.5 million units for the first and second half.

For notebook panel shipments, the original goal for 2008 was 6.8 million units, with 3 million units coming from the first half of the year and 3.8 million units from the second half, Lee said. The goal now is 6.1 million units for the whole year, 2.9 million units of which coming from the first half and 3.2 million units from the second.

But CPT raised its shipment goal for TV panels, which were originally expected to reach 1.4 million units in the first half and 1.3 million units in the second half for a total of 2.7 million units for 2008. The revised goal put 2008 shipments at 2.9 million units, 1.4 million units coming from the first half and 1.5 million units in the second half of the year, Lee said.

CPT president Chuang-Yi Chiu said 2008 shipments still look satisfactory. CPT has lowered its utilization rate by 10%, but the company expects it to be a short-term measure that will last only till the end of August when demand in the panel market rebounds, Chiu said.

Most of the major panel makers have already cut their production, with Samsung Electronics being an exception. Asked if Samsung's decision to not cut production will affect the panel industry's supply and demand, Chiu said it will have impact in one way or another.

But he commented that it is understandable why Samsung is not reducing its panel output because the Korean vendor has a strong LCD TV and monitor brand, so it has strong capabilities to digest inventories.

Commentary: LCD panel makers may still have satisfactory 3Q if production cut can accelerate inventory clearance

Rebecca Kuo, Tainan; Rodney Chan, DIGITIMES [Tuesday 29 July 2008]

With most major LCD players having cut their production amid slumping prices and a global economic downturn, the LCD panel market in the third quarter looks bleak. But global panel shipments in the third quarter may still stay flat, rather than drop, compared to the second quarter if the market is able to clear its inventory in time.

The sharp declines in prices may stimulate demand. Panel makers still hope back-to-school demand will provide momentum for IT applications, while LCD TV vendors are running pricing campaigns to boost sales.

LG Display (LGD) has joined AU Optronics (AUO) and Chi Mei Optoelectronics (CMO) in cutting production by about 10%. But LGD said its output reduction will last until the end of August, and utilization will rise again in September. It is a demonstration of LGD's expectations that the panel market will still see a seasonal upturn in September.

AUO has said its TV panel inventory is still at healthy levels, and clients are still making preparations for the high season. Although the inventory of monitor panels is about 1-2 weeks higher than normal, the excessive inventory will have been digested by the end of August. Notebook panel inventory is still as satisfactory levels, AUO said.

Panel makers believe the production cut will help clear inventory and bring a rebound sooner.

AUO to launch 10-inch netbook panel in 3Q08

Susie Pan, Taipei; Joseph Tsai, DIGITIMES [Monday 28 July 2008]

AUO senior VP and general manager of IT display business group, Paul Peng has noted that AUO is planning to launch a 10-inch panel for netbooks in the third quarter this year.

Peng noted that since 8.9-inch panels are most suitable for internet browsing, it is only logical for 8.9-inch panels to replace 7-inch ones. However, since 10-inch panels have the same resolution as 8.9-inch, replacement will not be as fast.

Peng said the netbook market is still developing making forecasts difficult, however since Asustek and Acer expect to ship five million units, while Dell and Hewlett-Packard (HP) both plan to launch new products, therefore annual shipments in 2008 will not be less than 10 million units.

AUO has has landed orders from Acer, Dell and HP, in addition to Asustek. In 2008, AUO will hold a more than 50% share of the netbook panel market, Peng claimed.

AUO may delay ramp at hybrid 7.5-8.5G plant if panel market is weak next year

Rebecca Kuo and Siu Han, Taipei; Rodney Chan, DIGITIMES [Friday 25 July 2008]

AU Optronics (AUO) may delay the ramp-up at its hybrid 7.5-8.5G LCD panel plant if the panel market is weak next year, but the company does not believe that the market will be as bad as others are predicting, according to AUO CEO HB Chen.

Many observers are warning that the LCD panel market may see oversupply when makers ramp up production at their next-generation lines, and the situation may get even worse if the market continues to be hit by a weak economy.

But Chen told an investors conference Thursday that unless something uncontrollable happens, the 2009 market will not be too bad. As for the capital expenditure (capex) for 2009, AUO will remain flexible, but it may delay the production ramp-up at its hybrid plant if the market is weak, Chen said.

AUO plans to kick off mass production in the third or fourth quarter of 2009.

Chen said AUO's capex for 2008 will remain at NT$130-140 billion as originally planned although the company will only run at 90% of its capacity for the third quarter. While the lower utilization is expected to impact the company's margins and profits, AUO still expects growth in the third quarter: 5% sequential shipment increase for the large-size segment, and 15% for the small- to medium-size segment.

But the average selling price (ASP) for IT applications will fall 15% sequentially and down slightly for TV panels in the third quarter, during which the ASP for overall large-size panels will decline 5%.

Chen said although the high season in the third quarter looks weak, demand may still pick up after the channel clears inventories in mid August. He said clients still have hopes that the Beijing Olympics and the long holiday around China's October 1 National Day will boost sales of LCD TVs.

AUO said its inventory increased to 40 days in the second quarter from 33 days in the first quarter. In order to keep the inventory at 40 days or so, AUO has to reduce its utilization rate to 90% in the third quarter, it explained.

AUO CEO HB Chen
Photo: Rebecca Kuo, Digitimes

PVI says Korean government red tape delaying Hydis takeover

Susie Pan, Taipei; Rodney Chan, DIGITIMES [Thursday 24 July 2008]

Prime View International (PVI) has revealed that the formal takeover of BOE Hydis has yet to take place because of slow progress by the Korean government working on completing the acquisition.

The Taiwan-based panel maker, which had previously expected to complete the takeover in mid June, said it has already paid the sum needed for the acquisition. It said it has also dispatched its personnel to Korea to help improve Hydis' operations, but Hydis' top management will not be changed in the meantime.

The bankrupt Hydis is currently under the administration of the Korean government, which has been slow in processing the acquisition, PVI said.

PVI Wednesday decided to issue unsecured overseas convertible bonds and overseas depositary receipts to raise about US$188 million to repay short-term loans it has taken out from banks to fund its takeover of Hydis.

PVI last November announced a deal to spend 260 billion won (US$257.68 million) to secure a 95% stake of Hydis.

AUO and CMO not delaying construction of 8.5 lines

Rebecca Kuo, Tainan; Rodney Chan, DIGITIMES [Wednesday 23 July 2008]

While the LCD panel industry is seeing its players delaying equipment installation for their 6G plants because of weak demand, AU Optronics (AUO) and Chi Mei Optoelectronics (CMO) have not changed their schedules for equipment move-in at their 8.5G lines, according to sources at TFT LCD equipment suppliers.

The sources explained that initial capacity at AUO and CMO's 8.5G plants will be low. However, the two biggest panel makers in Taiwan will not want to lose out to foreign competitors in the race to next-generation production, and therefore need their 8.5G plants to ramp up production as scheduled, the sources commented.

CMO has already reduced its utilization rate to 90%, while AUO has been said to have followed suit by cutting utilization by 10%. Chunghwa Picture Tubes (CPT) vice president James Wu confirmed today (July 22) that the company has already cut its output 10%.

While lowering their utilization rates, panel makers are also considering slowing their 6G expansion, the sources said. Panel makers are now in talks with equipment suppliers for a delay in the installation of equipment at their 6G lines, the sources revealed.

Citing CMO as an example, the sources said the maker initially planned to ramp up its 6G capacity to 80,000 substrates by the end of 2008, but it now wants to delay the installation of equipment for a capacity of 10,000 substrates.

Taiwan LED makers see improved gross margins in 2Q

Siu Han, Taipei; Joseph Tsai, DIGITIMES [Tuesday 22 July 2008]

Although LED demand did not surge during the industry's traditional peak season in the second quarter, LED makers are expected to see improved gross margins in the second quarter as compared to the slow season in the first quarter.

Affected by weak demand for LEDs used in backlight units (BLU) for small- to medium-size LCD panels, Unity Opto Technology saw its revenues in the second quarter drop 11% sequentially, but its gross margins are expected to increase to around 16-17%, up from 10% in the first quarter.

Bright LED Electronics' gross margins are expected to rebound to 20% in the second quarter, up from 14% in the first quarter. Market watchers also expect Epistar's gross margins to increase to 23-24% in the second quarter, up from 20% in the first quarter, while its earnings per share (EPS) will be around NT$0.5 (US$0.016)

LCD panel pricing trending toward production costs in some segments

Rebecca Kuo, Tainan; Rodney Chan, DIGITIMES [Monday 21 July 2008]

LCD panel makers are seeing prices for some popular segments, such as in the 32-inch TV panel segment, drop close to production costs, and prices could fall below production costs by the end of the fourth quarter, according to industry sources.

Typical 32-inch TV panels for the second half of July are being quoted at US$285, down US$13 from the first half of the month, according to DisplaySearch's latest panel pricing figures.

The sources indicated that first-tier panel makers' average costs for 32-inch TV applications in the third quarter are about US$260. And if the pace of current downward trend continues, prices for the 32-inch segment may have dropped below production costs by the end of the fourth quarter, the sources remarked.

For 42-inch full HD TV panels, DisplaySearch figures put quotes of typical panels at US$505 for the second half of July, down US$5 compared to the first half of the month.

The sources noted that while first-tier panel makers production costs' for the 42-inch segment are about US$490 for the third quarter, there is a good chance that the quotes may drop below production costs in the third quarter.

Panel makers are now reducing their output in hopes to curb the price slump. The sources commented that prices in August may fall at a much slower pace because of a seasonal increase in demand, but the end of the high season later this year may trigger another wave of pricing pressure.

Taiwan government loosens restrictions on China investments

Bryan Chuang, Taipei; Steve Shen, DIGITIMES [Friday 18 July 2008]

Taiwan's Executive Yuan (Cabinet) on July 17 eased restrictions on investment by Taiwan-based companies in China in a bid to allow local companies to utilize their capital more efficiently so as to improve their competitiveness, according to government officials.

Companies will be allowed to invest up to 60% of their net worth in China compared to the existing limits of 20-40%, said the officials, noting that the new rules will take effect starting August 1.

Under current rules, Taiwan-based firms with a net worth of at least NT$5 billion (US$164.8 million) can invest the equivalent of 40% of the amount in China, while the cap for companies with net worth of NT$5-10 billion and over NT$10 billion are limited at 30% and 20%, respectively.

A total of 52 listed-companies had exceeded the current investment ceiling and another 131 listed-companies were near the investment caps, the Chinese-language Commercial Times quoted data from the Ministry of Economic Affairs (MOEA) as indicating.

In addition, Taiwan's government will also waive any caps on China investments for Taiwan companies that keep their headquarters on the island as well as subsidiaries set up by multinational companies in Taiwan.

There are a total of 577 Taiwan-based companies that have kept their headquarters in Taiwan after making investments in China, with the number of such headquarters to reach 800 by year-end 2009 and to further expand to 1,100 by 2010, the Commercial Times quoted MOEA data as saying.

Meanwhile, the relaxation rules will also raise the cap on China-bound investment by small- and medium-size enterprises (SMEs) and by individuals.
SMEs can invest up to NT$80 million, or up to 60% of their net worth, depending on which is higher, in China, whereas individual investors will be allowed to invest up to US$5 million across the strait compared to current limit of NT$80 million.

Samsung executive said to be arriving in Taiwan for LCD panel supply talks

Max Wang, Taipei; Rodney Chan, DIGITIMES [Wednesday 16 July 2008]

An executive handling Samsung Electronics' display business will arrive in Taiwan this week for talks with LCD panel makers to secure supply for TV and monitor applications, according to industry sources.

The expected arrival of JK Kim, vice president of Digital Media Business at Samsung, comes amid a bleak outlook that the panel industry is bracing for slumping prices and persistently weak demand by cutting production. The latest news coming out of the industry is that Chi Mei Optoelectronics (CMO) has already decided to cut its output 10% effective immediately.

The sources disclosed that Kim already visited Taiwan makers in late June about panel supply and prices. Earlier in July, CMO executives flew to Korea in talks with Kim and other relevant Samsung executives, the sources said.

Kim's visit this week is expected to touch on panel supply and prices for both TVs and monitors, two areas in which Samsung is still having strong sales despite the sluggishness in the markets, the sources said.

Samsung, as opposed to its chief competitor Sony, which outsources its LCD TVs to Taiwan, has been assembling LCD TVs at its in-house facilities. But Samsung sources 40% of its TV panels from Taiwan, the sources noted.

Despite worries of oversupply for TV applications in the panel market, Samsung actually has seen shortages in some segments because of strong sales, and it is looking for more secure supply, the sources remarked.