Chi Mei deviates from positive outlook

Chi Mei Optoelectronics Corp (奇美電子), the world's No.4 supplier of flat-panel displays for computers and televisions, yesterday changed its tune about its vigorous third-quarter outlook, citing elusive growth in the demand for computers.

"We are largely taking a wait-and-see attitude about the third quarter," Hsu Chun-hwa (許春華), a vice president of Chi Mei Optoelectronics, said at a shareholders' meeting in Tainan. "We have been expecting computer demand to boom in the peak season beginning in the third quarter, but now the growth seems elusive."

Hsu's comments signal a diversion from Chi Mei president Ho Chao-yang's (何昭陽) remarks to investors early last month. Ho said at the time that demand for notebook computers would pick up in the second quarter and improve further in the second half of the year.

In the first quarter, computer display panels made up a hefty 70 percent of Chi Mei's total sales of NT$24.71 billion. The nation's biggest supplier of liquid-crystal display (LCD) panels received 10 percent of its sales from the TV segment.

Company spokesman Eddie Chen (陳彥松) said the growing concern in the market was a result of fewer people replacing their bulky cathode-ray tube (CRT) displays with stylish flat-panel monitors than had been expected.

Chi Mei said early last month that it expected shipments of TV screens to rise at a quarterly rate of 50 percent during the second quarter, but Ho lowered the projection to about 40 percent yesterday.

"Some liquid-crystal display makers switched to producing slim screens for computers using advanced technologies," Chen said.

Smaller Taiwanese players HannStar Display Corp (瀚宇彩晶) and Quanta Display Inc (廣輝) have allocated their advanced fifth generation (5G) facilities to manufacture 17-inch panels for LCD monitors for desktop computers in light of the lethargic growth in the sales of pricey LCD TVs, said Ken Yu (余文耀), an analyst at SinoPac Securities Corp (建華證券).

"The faster-than-expected output of monitors for computers will add extra pressure on the ongoing price drop," Yu said.

Prices of LCD panels will fall by 10 percent to 15 percent in the second half of the year, with a sharper slide expected for 17-inch and 19-inch panels for monitors, Yu predicted.

In other news, following the shareholders' meeting, the company board approved Frank Liao (廖錦祥), 66, to succeed Hsu Wen-lung (許文龍) as the company's chairman. Hsu, 76, ended his three-year term on Monday, but will remain on the board.

Liao yesterday re-emphasized that there is no connection between Hsu's political stance and the company's operation.

Beijing lashed out at Hsu's pro-independence views last month. Liao's remarks appear to be aimed at easing growing political pressure on the company as Chi Mei Optoelectronics and its parent company, Chi Mei Corp (奇美實業), are facing difficulties in building factories in China.

Dismissing speculation that Beijing has turned down the company's plan to set up a liquid-crystal module plant in Ningbo, Liao said Chi Mei Optoelectronics has not filed any applications with the Chinese authorities yet.