Taiwanese thin-film-transitory liquid crystal display (TFT-LCD) panel makers would post a 15-percent year-on-year increase in sales for computer and TV screens this year as prices are picking up on easing oversupply, a government-fund industry researcher said in the latest report.
Panel prices started to pick up by 5 percent in the second quarter after the industry hit the bottom in the first quarter in the wake of reduced inventory and reviving demand, according to a new report released by the Industrial Technology Research Institute (ITRI) over the weekend.
"Recovering panel prices [in previous quarters] will help improve the bottom line of local panel makers, who have suffered massive losses since the fourth quarter of 2004," said Jim Chung (鍾俊元), an ITRI analyst.
Chung expects panel prices to hold steady in the final quarter of this year on conventional Christmas shopping demand after another 5 percent increase in the third quarter.
According to Chung's forecast, during last quarter, local TFT-LCD panel manufacturers will report NT$134.3 billion in sales for panels bigger than 10-inches.
For the full year, companies are expected to posted higher sales in bigger-than-10-inches TFT-LCD screens totaling NT$505.74 billion (US$15 billion), up 15 percent from NT$440.8 billion a year earlier, the report said.
"We believe there's the chance for us to raise the outlook as panel prices are still on the rise," Chung said.
The nation's biggest flat-screen maker, AU Optronics Corp (友達光電), posted a 12.4-percent growth in consolidated sales in the first nine months of the year from a year earlier.
AU Optronics also makes smaller than 10-inch TFT-LCD panels for mobile phones and portable DVD players.
"In the future, companies making big-sized TFT-LCD screens may enjoy sales growth because of rising demand for LCD televisions," Chung said.
But the analyst warned that panel prices may slide in the first quarter of next year, weighed down by an expected supply glut.
"We expect a mild oversupply in the first quarter of 2006, if the world's TFT-LCD panel makers ramp up their production as scheduled," Chung said.
Chung's comments are in line with most industry analysts' expectations including Morgan Stanley analyst Frank Wang (
Wang has said he expects panel supply to exceed demand by around 11 percent in the first quarter of next year and to rise to 14 percent in the conventionally slow season in the second quarter, before a supply crunch in the third quarter.
In view of the expected industrial mid-term down-swing, Wang lowered the 12-month target prices for AU Optronics and for Chi Mei Optoelectronics Corp (奇美電子), Taiwan's No.2 LCD panel player, to NT$50 and NT$43, respectively, from NT$55 and NT$46.
Wang expects both firms will turn a profit during the downturn.
The first quarter of next year would be a good investment opportunity for long-term investors as 2007 and 2008 would be an up-cycle for the industry lifted by booming LCD TVs demand, Wang said.
AU Optronics is scheduled to released its third-quarter results tomorrow, while Chi Mei Optoelectronics will post its quarterly earnings on Nov. 3.
Shares of AU Optronics and Chi Mei Optoelectronics rose 1.04 percent and 0.8 percent, respectively, to NT$38.7 and NT$31.65, on the Taiwan Stock Exchange on Friday.
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