Print

Mail

wiki links

LCD makers should expect prolonged slump, analysts say

Taiwanese makers of liquid-crystal displays (LCDs) used in flat-screen TVs and computers may not be able to reap the rewards of next-generation panel factories because of falling prices, analysts said yesterday.

With standard 15-inch panels selling for less than the cost of producing them, fifth-generation, or 5G, plants -- developed to churn out 17-inch panels -- were supposed to help panel makers get back in the black.

"Seventeen-inch panel prices fell US$10 in November alone," said Frank Su (蘇穀祥), a flat-panel display analyst at BNP Paribas Taiwan.

"The panels are selling at a good price now, but by the time the new fabs ramp up production, the price will have dropped below the cost of production," he said.

Taiwan's No. 1 panel maker, AU Optronics Corp (友達光電), and Quanta Display Inc (廣輝電子) are not expected to fire up 17-inch panel production until the second quarter of next year, and No. 2 Chi Mei Optoelectronics Corp (奇美光電) won't be online until the end of the year.

"Seventeen-inch panels are selling for between US$250 and US$270 now, and prices are dropping between by US$10 and US$20 every month," said Debbie Wu (吳岱玲), a flat-panel-display analyst at Yuanta Core Pacific Securities Co (元大京華證券).

Analysts estimate 17-inch pan-els cost between US$200 and US$300 to produce, depending on plant capacity.

Fifteen-inch panels are already selling below production cost, causing domestic manufacturers to revise their income forecasts for this year.

Yesterday, Quanta Display revised its income forecast for this year down from a pre-tax profit of NT$1.7 billion to a pre-tax loss of NT$452.4 million.

No local LCD manufacturers are expected to post a profit this year, analysts said.

To compete with rivals in South Korea, LCD panel manu-facturers need to move up to the new 5G fabs, enabling them to produce 17-inch panels as quickly as possible, analysts said.

"Only companies with 5G fabs can stay in the market and stay competitive," Wu said.

The market leaders, South Korea's Samsung Electronics Co and LG Philips LCD, are expected to manufacture 17-inch panels at their 5G plants by the beginning of next year.

Meanwhile, other Taiwanese firms are also lagging far behind. Chunghwa Picture Tubes Ltd (中華映管) has delayed its 5G launch until 2004, as has HannStar Display Corp (瀚宇彩晶).

With the protracted slump in panel prices and more capacity from the new plants hitting the market next year, analysts predict the sector will have to undergo further consolidation.

"In the first half of next year there will be a merger in the local industry," Su said, refusing to name names.

But Wu dismissed the merger speculation, suggesting help might come from overseas. "At this moment I think consolidation is unlikely. We will probably see the Taiwanese tying up with the Japanese," she said.

LCD monitors are expected to overtake cathode-ray tube monitors in unit sales in 2004, US-based research firm DisplaySearch reported last month.
This story has been viewed 1909 times.