Taiwanese liquid-crystal-display (LCD) panel makers should see a gradual recovery in revenues in the second half of this year, helped by back-to-school demand and rising demand for flat-panel televisions because of falling prices, a local researcher said yesterday.
Local LCD panel makers suffered a setback in the second quarter as the World Cup soccer tournament failed to significantly boost demand for LCD TVs as panel manufacturers anticipated, the Industrial Technology Research Institute (工業技術研究院) said.
Lackluster demand, combined with rapid capacity expansion, caused inventories to rise and sent panel prices plunging at a steeper-than-expected rate, resulting in record-high quarterly losses for industry leader LG Philips LCD Co.
However, the company has said prices are stabilizing.
"This time, the [LCD] industry is more likely to have a milder, or a U-shape, recovery in the second half compared with the drastic V-shape revival last year," said Jim Chung (鍾俊元), a flat-panel industry researcher at the Hsinchu-based research institute.
Chung said the deciding factor would be how fast those companies write off inventories, whether falling LCD TVs prices would spur demand and the strength of back-to-school shopping for computers.
Chung forecast that sales of local thin-film-transistor (TFT)-LCD panel makers led by AU Optronics Corp (
Growth would rise in the fourth quarter, expanding at around a 10 percent quarterly rate, he projected.
Local TFT-LCD makers suffered a roughly 10 percent decline in sales during the April-June period.
To reduce investment risks, Chung suggested that local TFT-LCD panel manufacturers not build factories that are more advanced than 7.5-generation (7.5G) plants, citing limited demand, high technological barriers and huge equipment expenditures.
An 8G factory, which can be used to cut 50-inch panels for TVs, would cost more than NT$100 billion, compared with around NT$80 billion for a 7.5G plant, according to Chung.
He suggested that domestic manufacturers focus on making mainstream-sized panels.
TVs of that size will account for 75 percent of total LCD TV sales by 2008, he said, citing market researcher iSuppli Corp's forecast.
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