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AU Optronics Corp says it will boost output: TAIEX drops

Stocks fell yesterday, paced by flat-panel display makers such as AU Optronics Corp (友達光電), after the company said it plans to boost production of the panels used in televisions, threatening industrywide earnings.

The TAEIX lost 33.95, or 0.5 percent, to 6,454.39. About three stocks fell for every two that rose. Taiex Futures for February delivery fell 0.3 percent to 6,458.

About 8.7 billion shares changed hands, double the average daily trading in the past three months. Shares worth NT$170.3 billion (US$5.1 billion) traded.

A "rapid increase in flat-panel capacity will put pressure product prices," said Harvey Chang, a fund manager at United Securities Investment Trust Corp (聯合投信).

AU Optronics, the country's largest maker of flat-panel displays for personal computers, shed 5.4 percent to NT$45.50. Rival Chi Mei Optoelectronics Corp (奇美電子) dropped 4.8 percent to NT$41.40.

AU Optronics plans to spend NT$85 billion (US$2.56 billion) to make more panels used in televisions, which accounted for only 4 percent of the company's output in the last quarter. The company plans to sell up to 500 million new shares overseas to fund the expansion.

Selling the shares "will cast doubt on its future profitability," said Phil Chen, a fund manager at Taipei-based Grand Cathay Securities Investment Trust Co (大華投信).

China Development Financial Holding Corp (中華開發金控) rose 1.1 percent to NT$17.70, on news that KGI Securities Co (中信證券) president Angelo Koo (辜仲瑩) is trying to wrest the chairmanship of China Development Financial from incumbent Diana Chen (陳敏薰).
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