Chi Mei expects its fourth quarter sales to grow 20%

Chi Mei Optoelectronics Corp (奇美電子), Taiwan's second-largest flat-panel maker, expects sales for the fourth quarter to grow by 20 percent sequentially with a greater contribution from the increased shipments of large-sized panels used in flat-screen television, a company executive said yesterday.

"We're confident about the fourth quarter and we believe the growth momentum will be sustainable," Chi Mei president Ho Chao-yang (何昭陽) told an investor conference.

The company said last week that its third-quarter sales jumped by 33.6 percent to NT$16.73 billion from the previous quarter due to rising sales from large-sized flat panels. Large-sized panels, considered those which measure 20 inches diagonally or bigger, accounted for about 15 percent of the company's total panel sales in the third quarter, up 11 percent from the 4 percent recorded in the second quarter.

Ho said the company is expected to reap NT$4 billion in after-tax profits during the October to December period. That surge in earnings is based on a planned shipment target of about 250,000 units of liquid crystal display (LCD) panels during the same period, he added.

Given the optimistic outlook for the development of the flat-screen TV industry next year, the Taiwanese company also set an ambitious target of grabbing 20 percent of the global large-sized LCD panel market next year. Demand for the pricy LCD-TVs may soar to about 10 million units from 4.9 million this year, he estimated.

Chi Mei plans to produce 350,000 units of the LCD panels used in flat-screen TVs this year, and is targeting 2 million units for next year, Ho said. The sales of large-sized LCD panels will constitute about 30 percent of Chi Mei's total sales, which will double that of the 15 percent in the third quarter, he added.

Rival AU Optronics Corp (友達光電), Taiwan's largest LCD panel provider, said last week that its sales from large LCD-TV panels only accounted for 2-4 percent of its total sales of NT$28.37 billion during the third quarter.

An analyst said the cost-reduction efforts by Chi Mei were a concern, however.

"Though Chi Mei's sales contribution from panels used in LCD-TVs outpaced AU, its weak cost control has made it lag behind AU in terms of profitability," said Eric Twu (涂紀華), an industry analyst with SinoPac Securities Corp (建華證券).

The flat-panel maker yesterday also said its October sales hit a record high of NT$8.84 billion, up 8.6 percent from NT$8.14 billion in September, due to rising shipments of large-sized liquid crystal display (LCD) panels after it posted resilient third-quarter financial results, said Eric Chen (陳彥松), the manager of the firm's finance and accounting division.

Following in AU's footsteps, Chi Mei said it will gradually withdraw from the manufacturing of plasma display panels (PDP) mostly used in 40-inch-screen-or-bigger TVs, and pin its hopes on the potential growth of the LCD-TV industry.

The company said last week that it will invest about NT$300 billion in building next-generation plants in the the Southern Taiwan Science Park (南部科學園區).