LCD makers see signs of industry-wide recovery

Taiwanese (LCD) panel makers, led by AU Optronics Corp (友達光電), yesterday released more encouraging signs for an industry recovery as last month's sales rose on record-high panel shipments.

Top AU Optronics said yesterday that consolidated sales climbed nearly 30 percent last month to NT$14.62 billion from February's NT$11.52 billion, as shipments of large-sized panels for computers and televisions increased to 2.3 million units.

The result, however, was still a 3.2-percent decrease from a year ago, the company said. In the first three months of this year, AU chalked up NT$38.84 billion in sales, down 1.6 percent from NT$39.5 billion in the final quarter of last year.

"The monthly growth rate is quite impressive. But AU Optronics' total sales for the first quarter is in line with my projection," said Frank Wang (王安亞), an analyst with Morgan Stanley & Co in Taipei.

"The first quarter should be the worst period for the industry," Wang said, adding that AU Optronics would likely see a 10 percent growth in sales in the current quarter from the first quarter figure.

Chi Mei Optoelectronics Corp (奇美電子), the nation's second-largest supplier of flat panels, saw demand for its products exceed the firm's expectations in the first quarter, according to company chief executive Eddie Chen (陳彥松).

The Tainan-based company is scheduled to post its results for last month tomorrow.

Strong provided a rare chance for flat panel makers to raise prices after slashing them over the past three quarters. Prices for mainstream 17-inch screens rose by US$3 to U$160 this month after rising twice last month, Taipei-based market researcher WitsView Technology Corp (聯景科技) said.

Prices 19-inch screens, which have been under the heaviest pressure, also stabilized on resilient demand, after falling by US$5 last month, WitsView said.

Betting a rebound in demand, investment banks including Merrill Lynch and Citigroup Inc upgraded their investment rating on major players including AU Optronics and Chi Mei.

Shares AU Optronics and Chi Mei rose 0.62 percent and almost 1 percent, to NT$48.70 and NT$51 on the Taiwan Stock Exchange.

But Morgan Stanley's Wang said he would not change his current "underweight" rating on AU Optronics until the emergence of more clear signs of an industry recovery, as concerns over excess supply linger.

Investors already factored in the market improvement, Wang added, so AU Optronics shares now look expensive. AU shares have climbed around 10 percent since the beginning of the year.

Optimistic also spread to smaller player Chunghwa Picture Tubes Inc (中華映管). The company said yesterday that sales increased 10 percent last month to NT$6.56 billion, from NT$5.94 billion in February.

But that was a 40-percent decline from last March.

Large-sized shipments hit an all-time high of 1 million units after a new "4.5-generation" fab started production.