Share prices of the nation's major flat-panel makers fell as much as 3 percent on concerns that excessive inventory may stunt the recovery of the highly cyclical industry from an oversupply-driven trough.
The sell-off was triggered by a Chinese-language newspaper report which said that panel inventory would shoot up to 5.5 million units on faltering demand for flat-screen liquid-crystal-display (LCD) TVs, citing industry researcher DisplaySearch's forecast.
That bleak forecast, along with another report about larger rival Samsung Electronics Co's possible reduction in capital spending, dealt a blow to Taiwan's major LCD panel makers, led by AU Optronics Corp (
Flat-panel manufacturers have been expanding their capacity in expectation of growing demand for LCD TVs.
Shares of AU Optronics, the nation's top LCD panel supplier, declined 2.81 percent to NT$43.25 on the Taiwan Stock Exchange, hitting the lowest level in the past two weeks. Shares of Chi Mei Optoelectronics Corp (
Shares of three other smaller panel makers were mixed, with Chunghwa Picture Tubes Ltd (
But the Austin-based researcher refuted the report and stressed its view of healthy demand for the LCD screens.
"We continue to believe in the health of the LCD-TV-panel market and do not expect inventory growth to be a concern," DisplaySearch said in a statement posted on its Web site yesterday.
The inventory increase was not alarming as it was mostly due to the inefficiency of the consumer electronics supply chain, said David Hsieh (
"Besides, it is normal to see higher inventory build-up ahead of the year-end shopping season," Hsieh said.
The news also sent shares of LG Philips LCD Co, the world's top slim-screen maker, plunging more than 2 percent in the early session, but the stock regained support later and ended 0.12 percent higher.
The stock price of Samsung, the world's second-largest LCD-panel maker, was unchanged yesterday after sliding over 2 percent.
Hsieh said the inventory would be reduced to around 3.3 million units in the final quarter of this year due to robust Christmas season demand for the slim-screen TVs and dramatic price cuts by Sony Corp.
Prices of mainstream 32-inch LCD panels will not fall sharply to the psychological level of US$500 apiece by the end of the year as some have predicted, because demand is sustainable, he added.