Optoelectronics sector may slow this year: report

Taiwan's optoelectronics industry may grow at a slower rate this year after thriving last year, mostly due to a soft flat-panel display sector, a government-fund research house said yesterday.

"After the fast expansion last year, it will be challenging for Taiwan's optoelectronics industry to have significant growth," said industrial analyst Huang Shin-yi (黃欣怡) with Industrial Economics and Knowledge Center (IEK, 經資中心).

According to IEK's latest report, sales for local optoelectronics companies will increase by 34 percent to NT$1.5 trillion this year, from a record high of NT$1.1 trillion last year.

The annual growth will represent a slower expansion than last year's 42-percent growth rate, according to IEK.

"Slower growth for the flat-panel sector is the key factor weighing down the annual growth as the sector accounts for the biggest share of the nation's optoelectronics industry," Huang said.

The thin-film-transistor (TFT) liquid-crystal display (LCD) sector accounted for over 60 percent of the nation's total sales from optoelectronics firms last year.

Local slim-screen makers would only have a 44-percent sales growth annually to NT$1.02 trillion this year, compared to a 67-percent jump last year, according to IEK's projection.

"Cautious capacity expansion and intense competition from South Korean rivals will be the primary reasons for the slower growth," said IEK analyst Jim Chung (鍾俊元).

Last year saw the most aggressive capacity expansion yet for local makers of flat panels for computers and TVs, which has greatly boosted the sector's sales. But they decided to put brakes on that expansion in light of disappointing demand for the pricey sets and a supply glut last year, Chung said.

Taiwan's top TFT-LCD panel maker AU Optronics Corp (友達光電) late last year halted construction of a next-generation fab in Taichung. Smaller local rivals followed suit.

By contrast, South Korean rivals including Samsung Electronics Co and LG Philips LCD Co have not shown signs of slowing down their steps to building more advanced plants to maintain their dominance in the TFT-LCD industry.

Nonstop capacity expansion and better cost controls gave South Korean firms, mostly conglomerates, an advantage in maintaining their market dominance, Chung said.