Mon, Jul 31, 2006 - Page 12 News List

Small LCD firms should team up: report


The nation's second-tier liquid-crystal-display (LCD) panel makers, including Chunghwa Picture Tubes Ltd (中華映管), should form a strategic alliance to improve their product portfolios and better cope with "down" cycles driven by supply gluts, a report said on Friday.

With prices declining by 20-30 percent for computer and TV panels, smaller makers may see greater losses as panel prices drop below the cost of production, Taipei-based WitsView said.

Against this backdrop, Chung-hwa, the nation's third-largest maker of flat panels, HannStar Display Corp (瀚宇彩晶) and Innolux Display Corp (群創) should collaborate with each other to better ride out the LCD industry's boom-and-bust cycles, it said.

"A strategic alliance between the second-tier panel manufacturers would help complement their product lineup and profitability ... This is an option for them [to improve operation] in addition to mergers," the report read.

The three LCD panel manufacturers are all focusing on making computer panels and it will be difficult to avoid price erosion during over-capacity-driven downturns, WitsView said.

Innolux, which assembles computer monitors, only makes about half of its computer panels and buys the rest from rivals, the researcher said. Chunghwa should concentrate on making 17- and 19-inch computer panels for Innolux, it added.

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