Chi Mei Optoelectronics Corp (
The result serves as an additional sign that the LCD industry is drifting into a new trough after the last downturn in 2002.
"The flat-panel industry is plagued by oversupply and a price collapse followed. Now the industry is in a bleak winter," president Ho Jau-yang (
"Visibility is too low for us to tell when the downturn will end this time," Ho added.
In the short term, price pressure could be alleviated in the fourth quarter, after a dramatic price correction over the past three months. Shipments will increase by at least 10 percent in the period due to seasonal demand, he added.
But, the fourth quarter could be a tougher period than the three-month period ended last month, Ho said.
"We'll try to break even in the quarter," he said.
Ho's comments came just one day after rival AU Optronics Corp (
Compared to AU Optronics, Chi Mei Optoelectronics has a better chance of keeping its head above the water for the full year, given the better quarterly result.
During the third quarter, Chi Mei Optoelectronics' earnings plunged nearly 63 percent to NT$3.27 billion, or NT$0.89 a share, from NT$9.01 billion three months ago. The company has not experienced such a steep decline since the second quarter of 2002.
Despite this, the result slightly exceeded the 70 percent decline expected by most analysts.
"We believe that is primarily because Chi Mei has an advantage in product mix," said Frank Su (
"But, Chi Mei still risks booking a loss in the current quarter," he said.
Prices for large-size panels, mainly used for computer monitors, tumbled over 30 percent in the third quarter from the previous quarter, while prices of flat screens for TVs merely fell 6 percent, according to researcher DisplaySearch.
LCD panels for TVs accounted for a third of Chi Mei Optoelectronics' total sales in the period to September, compared to less than 10 percent of AU Optronics' sales.
However, Ho said the company will change its long-standing strategy of focusing on the TV market. The company plans to increase its presence in the computer monitor market and intends to break even in the final quarter through stringent cost reduction, he added.
The shift in strategy garnered a positive response from Su.
"The change sounds quite nice to me," Su said.
With those efforts, the Tainan-based LCD screen maker hopes to avoid having to reduce its 2004 financial projection of NT$30.2 billion profits, after making NT$20.7 billion in the first nine months.
AU Optronics and HannStar Display Corp (
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