Chunghwa Picture Tubes Ltd (中華映管), the nation's third largest maker of TFT-LCD panels for flat computer screens, said yesterday that strong sales and rising prices should return the company to profitability this year.
The firm expects to earn NT$11.1 billion (US$317 million) this year, as sales increase by a third to NT$43.3 billion.
New orders from companies such as Apple Computer Inc, which has introduced a new iMAC with a flat-display screen, has sent the price of thin film transistor-liquid crystal display (TFT-LCD) panels up as much as US$5 per unit each month this year to the current price of roughly US$260 per standard 15-inch panel, according to analysts.
"Right now we cannot fully satisfy our customers' requirements," said Tony Chien (簡振成), spokesman for Chunghwa Picture Tubes.
Last year, the company lost NT$6.5 billion as overproduction combined with weak demand to send per-unit prices below the cost of production.
Chunghwa's first quarter results, also released yesterday, show the rebound has already fired up the company.
Revenue in the first quarter hit NT$11.79 billion, a 57 percent increase over last year, with profits soaring to NT$1.79 billion -- far higher than the NT$28.6 million the company earned last year.
Last month, the company decided to invest NT$60 billion in two new TFT-LCD plants. The company will build a new "fourth generation" plant and a state-of-the-art "fifth generation" plant in Taoyuan County's Lungtan township.
Current fourth-generation plants produce large sheets of glass from which up to six 15-inch LCD panels may be cut. The newer fifth generation plants produce much larger sheets of glass capable of being cut into 12 to 15 standard-size 15-inch screens. The newer plants are likely to be used for 17-inch and larger flat-panel computer displays as well as LCD televisions, according to analysts.
Another factor sending profits up at TFT-LCD makers is lower production costs. AU Optronics Corp (友達光電), Chi Mei Optoelectronics Corp (奇美光電), Chunghwa and HannStar Display Corp (瀚羽彩晶), the top four LCD panel makers in the nation, in order of size, are increasing the number of panels yielded from each sheet, thus lowering production costs, according to Debbie Wu, TFT-LCD industry analyst at Yuanta Core Pacific Securities Co (元大京華證券).
"This year should be a very good year for all of them, it is a total turnaround story," Wu said.
One concern some industry players have voiced is that too many new plants are being built worldwide and will send the industry back into overproduction.
Profits in the TFT-LCD panel industry have long been elusive due to rampant overproduction by South Korean, Japanese and Taiwanese firms.
Wu said that the impact of new plants on the current market situation will not be felt until next year, "so we believe the tight [supply] situation will continue throughout this year and earnings should be fantastic."
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