Wed, Jul 28, 2004 - Page 10 News List

HannStar predicts flat-screen prices will fall drastically

By Lisa Wang  /  STAFF REPORTER WITH BLOOMBERG

HannStar Display Corp (瀚宇彩晶), Taiwan's No. 4 flat-screen panel maker, expects panel prices to fall by up to 20 percent in the current quarter due to ballooning inventories amid stagnant demand, a company official said yesterday.

"We did detect that the sector is drifting into oversupply, but our shipments will climb at a 15 to 20 percentage rate [quarter on quarter] as our advanced fifth-generation fab is on course to ramp up," said HannStar president Wu Tai-kang (吳大剛).

His forecast stands in sharp contrast to bigger rival AU Optronics Corp's (友達光電) plan to reduce production to avert a supply glut.

In the second quarter, Hann-Star's shipments rose to 1.5 million units from 1.2 million units in the first three months.

Sales from liquid crystal display (LCD) screens used in computer monitors made up 90 percent of total sales of NT$12.99 billion in the April-June period.

Quarterly earnings jumped 22 percent to NT$2.89 billion from NT$1.7 billion three months ago. Earnings per share rose to NT$0.58 from NT$0.38.

That brought earnings to NT$4.6 billion in the first half, or NT$0.85 a share, a reversal from a loss a year ago of NT$965 million, or NT$0.3 a share.

"We're not too pessimistic," said David Chou (周定輝), a HannStar vice president. "The slowdown won't last long, as it did two years ago."

Chou said demand for LCD screens used in computer monitors will return in the fourth quarter, a peak season for the computer sector, as a 15 percent to 20 percent price cut from the average US$245 second-quarter price should stimulate demand.

Industrywide, average prices of LCDs for computer monitors are expected to fall faster than previously forecast, market researcher DisplaySearch said in its latest monthly report.

Average prices will fall 19 percent from their May peak to US$246 in December, or 13 percent lower than last month's forecast, Austin, Texas-based DisplaySearch predicted.

The research firm, which also cut its price forecasts for LCD televisions and notebook computers, said some customers have 50 days of inventory on hand, or five times the usual amount.

DisplaySearch cut its price forecasts for a second consecutive month, underscoring concerns that Samsung Electronics Co and other panel makers may have overestimated prices consumers will pay for flat-screen televisions and monitors.

"Some panel suppliers are panicking," the report said. Last month, "leading LCD monitor brands slashed panel orders claiming reduced LCD monitor demand, rising inventory levels and excessively high panel prices."

Average prices of LCDs used in televisions will fall 7.6 percent from this year's peak in May to US$510 in December, or 2.5 percent lower than the forecast last month, according to the report.

Prices of LCDs geared for notebooks will fall to US$200, or 15 percent lower than in January and 8.7 percent lower than the researcher's previous forecast.

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