Innolux expects to turn profitable

Innolux Display Corp (群創光電), a Taiwanese computer flat-panel maker, yesterday said it started booking profits in the third quarter after three years of operation, paving the way for an initial public offering next year.

Innolux primarily makes thin-film-transistor (TFT) liquid-crystal-display (LCD) screens for computers as well as monitors for its parent company, Hon Hai Precision Inc (鴻海精密), which supplies desktop computers to computer giant Dell Inc.

"Innolux should have started making profits in the third quarter, slightly lagging behind Taiwan's two largest TFT-LCD players," Innolux's president Tuan Hsing-chien (段行建) said on the sidelines of a display forum arranged by a government agency yesterday.

Tuan declined to give detailed financial results.

AU Optronics Corp (友達光電), Taiwan's top LCD screen maker, returned to profitability in the second quarter, riding on recovering demand, while No.2 player Chi Mei Optoelectronics Corp (奇美電子) expected to eke out profits a quarter later.

Market researcher DisplaySearch also turn more positive on the sector. The Austin-based researcher yesterday raised its third-quarter outlook for the TFT-LCD industry.

Revenues for global LCD makers will grow 46 percent year-on-year to US$12.1 billion, about 8 percent higher than the researcher's previous estimate, it said in a statement.

Tuan yesterday told reporters that Innolux last week filed an application for an initial public offering (IPO) on the Taiwan Stock Exchange.

"The IPO will give Innolux easier access to raise funds in the future," Tuan said.

He expects Innolux shares will traded on the main bourse by the third or fourth quarter of next year. Innolux has not set a price to float the 2.1 billion shares outstanding.

According to stock-exchange rules, only money-making companies are qualified to list on the local stock markets.

With most of its output going to Hon Hai, Innolux would be able to weather industry downturns better than other panel players, Daniel Wang (王德善), an analyst with Primasia Securities in Taipei, said.

Innolux now has two plants — a less advanced 4.5-generation fab and a fifth-generation (5G) fab, Tuan said.

The company ramped up the cost-efficient 5G plant in the second quarter, with a monthly output of 50,000 glass substrates, he said. Innolux plans to boost output to around 75,000 units per month by the third quarter of 2006,

he added.

Innolux posted sales of NT$24.08 billion in the first eight months of the year, jumping from NT$1.9 billion a year ago.

Tuan yesterday declined to comment on recent speculation that Innolux was in talks with Taiwan's No.3 LCD panel maker Chunghwa Picture Tubes Inc (中華映管) about a merger.

Innolux's shares, which trade on the gray market ahead of a stock-exchange listing, fell 0.72 percent to NT$35.87 on average yesterday.