Tue, Nov 02, 2004 - Page 10 News List

Prime View raises forecast

PRIME POSITION The small flat-panel display maker boosted its full-year forecast yesterday, but price pressure may be ahead as rivals move into its niche

By Lisa Wang  /  STAFF REPORTER

Prime View International Co (元太科技), a leading maker of small-size flat-display panels in Taiwan, yesterday raised its financial projection for the second time this year on rising panel demand for DVD players.

But, Prime View's success in the small-or medium-size screen sector may be limited as more large-size flat panel makers start to branch into this areas to fill overcapacity and to avert price erosion.

"We do feel price pressure escalating as more players join in the game," said Scott Liu (劉思誠), vice chairman of Prime View.

Of Taiwan's five thin-film-transistor (TFT) liquid-crystal-display (LCD) panel makers, Quanta Display Inc (廣輝電子) is the sole player to have not extended its business into this area. Stronger rival AU Optronics Corp (友達光電) has been making an aggressive effort to boost its presence in this area.

As a result, prices for 7-inch LCD flat displays used mostly in DVD players and automobiles equipped with TVs may fall about 10 percent to 15 percent in the final quarter from the third quarter, Liu said.

Currently, around half of Prime View's shipments are 7-inch panels, the company said.

Prime View will remain profitable in the slack October-December period, compared to losses at AU Optronics, Liu said, adding that the company will maintain gross margin at 20 percent.

The optimistic outlook has prompted Prime View's latest hikes to its financial forecast. Revised net income for this year is expanded to NT$2.25 billion, or NT$5.29 per share, on revenue of NT$12.17 billion.

This represents a 14 percent increase from earnings of NT$1.72 billion estimated in April.

In the first three quarters, Prime View earned NT$1.97 billion, or NT$4.61 a share. The result is a more than six-fold increase from NT$311 million a year earlier.

Looking ahead, Liu expects the good times to continue.

"Prime View's growth will be significant in 2005," Liu said.

Sales could jump 30 percent, at least, next year at an annual pace, but the visibility for profits is pretty limited, he said.

David Hsieh (謝勤益), president of market research firm DisplaySearch's Taiwan branch, warned that manufacturers of small or medium-size LCD displays, especially those for DVD players, must brace for a stiff price war next year.

"We expect there'll be ample room for panel prices of DVD players to fall further next year, as more players are swarming into this segment as it has a lower technology threshold," Hsieh said.

"Almost every less-advanced STN [super twisted nematic] panel maker has already tapped into this segment and that will have a great impact on panel prices," he said.

Demand, meanwhile, will grow at a slower rate, he said.

DVD player manufacturers will need about 10 million panels next year, up 11 percent from 9 million estimated for this year, according to DisplaySearch.

Prices of panels for DVD players have unexpectedly fallen to US$45 per unit and will drop further to US$40 by the end of the year, the research house said.

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