Wed, Jul 02, 2003 - Page 11 News List

Chi Mei coughs up NT$9.5 billion to fund panel plant


Chi Mei Optoelectronics Corp (奇美電子), the nation's second-biggest maker of flat-panel displays for personal computers, raised NT$9.5 billion (US$274.5 million) in a share sale to local investors to finance the equipping of its newest plant.

Chi Mei sold 500 million shares for NT$19 each, almost 30 percent less than yesterday's closing stock price of NT$27.

The shares surged NT$1.70, or by the 7 percent market limit.

Chi Mei will post a profit in the second quarter, some analysts said.

"An improving product mix and strong prices are driving profits for the company," said Frank Lee, an analyst with BNP Paribas Peregrine.

Chi Mei's share sale adds to signs of improvement in the US$33 billion flat-panel industry, dominated by companies in South Korea and Taiwan.

The outbreak of SARS in Asia slowed construction of factories, curbing excess supply and supporting prices, market researcher DisplaySearch said in a statement last month.

Companies now are boosting production of screens used in televisions, computers and other electronic products, as bulky glass tube displays start to become a thing of the past. Analysts and investors said the outlook for the industry in the second half has improved.

Chi Mei started shipping its first flat panels for televisions in March, Lee said.

The company is making a profit margin of about 30 percent on the screens, a business currently dominated by Japan's Sharp Corp.

Tatung Co (大同), which owns 60 percent of Chunghwa Picture Tubes Ltd (中華映管), the nation's third-largest flat panel maker, on June 20 said Chunghwa Picture turned profitable in May and expects continued improvement in the unit's earnings in the second half.

With the share sale, Chi Mei has all the money it needs to buy all the equipment it needs for its first so-called fifth-generation flat-panel plant, which can make large screens for televisions, finance manager Eddie Chen (陳彥松) said.

The current price for a screen that measures 15 inches diagonally, which is the most widely used panel in notebook computers, is US$190, Chen said.

The company sells 17-inch screens for around US$265, he said.

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