Sat, Sep 17, 2005 - Page 10 News List

Flat-panel stocks plunge on fears of inventory glut

By Lisa Wang  /  STAFF REPORTER

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 (友達光電).

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 (奇美電子), Taiwan's No. 2 flat-panel maker, dropped 0.68 percent to NT$36.40.

Shares of three other smaller panel makers were mixed, with Chunghwa Picture Tubes Ltd (中華映管) rising 4.8 percent to NT$9.70, Hannstar Display (瀚宇彩晶) gaining 2.3 percent to NT$7.47 and Quanta Display (廣輝電子) falling 2.2 percent to NT$11.

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 (謝勤益), president of DisplaySearch's local branch.

"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.

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