Fri, Feb 18, 2005 - Page 10 News List

Demand is rebounding, AUO says

PANEL MARKET Prices remained steady last month, halting the severe slide seen in the fourth quarter, and demand is stronger, the firm said

By Lisa Wang  /  STAFF REPORTER

AU Optronics Corp (AUO, 友達光電), the world's No.3 maker of liquid-crystal-display (LCD) panels for computers and slim-screen televisions, yesterday said demand is bouncing back and offsetting pressure for further price drops.

The company's comments came after prices remained steady last month, following an over 35-percent price decline during the second-half of last year, which caused massive losses for all Taiwanese flat-panel makers in the fourth quarter.

"After [a series of] price cuts, demand has been strong recently in most segments, including LCD TVs and monitors," company chairman Lee Kun-yao (李焜耀) told an investor's conference.

That may provide an opportunity for AU Optronics to lift prices slightly for mainstream 17-inch LCD screens for computer monitors, if the current supply constraints for the product extend into next month, the company said.

"We are currently unable to meet customer demand. Some customers even called requesting more panels, something rarely seen in the past six months," Lee said.

The budding recovery means AU Optronics expects to boost its factory utilization rate back to 95 percent in the first quarter, from 75 percent in the fourth quarter.

Average selling prices will fall by a low single-digit percentage point in this quarter from the last quarter, due to weak demand for panels used in laptop computers, the company said.

But, growth momentum did not appear to have convinced AU Optronics that its financial result would improve in the first quarter.

"It's hard to tell whether AU Optronics will have a better first quarter than the fourth quarter," said chief financial officer Max Cheng (鄭煒順).

Last quarter, the thin-film-transistor (TFT)-LCD maker posted its first loss in two years amid the industry's latest downturn.

Quarterly losses reached NT$2.23 billion, or NT$0.46 a share, bigger than the company's estimate of NT$1 billion, as panel prices dropped faster and steeper than expected.

During the period, average prices fell nearly 20 percent to US$180, from US$215 in the third quarter.

Last year, however, was still a profitable period for the company. Earnings jumped 78 percent to NT$27.96 billion, from NT$15.66 billion in 2003. Earnings per share rose to NT$5.82 from NT$3.65 on higher revenue of NT$168.22 billion.

Looking ahead, AU Optronics said it is more optimistic now than it was six months ago, as rising demand may bring supply constraints by the year's end.

AU Optronics' comments did not seem to erase industry watchers' concerns about the highly cyclical industry.

"We feel the industry is improving, but the growth engine seems weak," said Ken Yu (余文耀), an analyst with SinoPac Securities Corp (建華證券), after the investor's conference.

Yu said that it was disappointing to hear that AU Optronics was leaving its shipment forecast unchanged at 5.5 million units for the first-quarter, compared to expectations of a 10 percent expansion by its South Korean rival LG Philips LCD Co.

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