Price declines likely to dog panel makers

Taiwan flat-panel display makers such as AU Optronics Corp (友達光電) may face wider losses because a glut of the screens will cause prices to slide until at least the middle of the year, according to Macquarie Research.

"Lower panel prices at negative margins will cause losses to worsen," said Nicholas Teo, an analyst with Macquarie Research, in a report published yesterday. Teo lowered his ratings on both companies last year. "We expect more pricing pressure from March and into the second quarter of 2005."

AU Optronics, the world's third-largest maker of flat-panel displays for computers and televisions, had an unaudited fourth-quarter loss of NT$2.23 billion (US$70 million), compared with net income of NT$7.6 billion a year earlier.

Rival Chi Mei Optoelectronics Corp (奇美電子) had a fourth-quarter loss of NT$3.51 billion, compared with net income of NT$4.8 billion a year earlier.

Teo lowered his rating on the shares of AU Optronics to "underperform" on Aug. 4 last year from "outperform." The shares have lost 35 percent of their value since peaking on April 19 last year. Teo has also had an "underperform" rating on Chi Mei's shares since Aug. 5.

Nine new liquid-crystal display plants worldwide will start production in the first half this year, Teo said.