Thu, Dec 14, 2006 - Page 11 News List

Antitrust probe pushes local LCD shares down

LEGAL CRUNCH Subsidiaries in Japan and the US of Chi Mei Optoelectronics Corp are among the makers of LCDs under investigation for possible price fixing

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Shares of liquid-crystal-display (LCD) makers such as LG.Philips LCD Co extended declines on concern the companies will have to set aside money because of an antitrust probe in the US$69 billion industry.

LG.Philips and Taiwan's AU Optronics Corp (友達光電), already beset by sliding screen prices, fell for a second day after authorities in the US, Europe, Japan and South Korea began investigating LCD makers for alleged price fixing. Any penalties would squeeze profits, analysts said.

Akinori Yamada, a director of management and planning at Japan's Fair Trade Commission, said yesterday that the probe was related to price fixing.

"Companies will have to start setting aside provisions for the potential fines," said Jeff Kim, an analyst at Hyundai Securities Co in Seoul. "Cash flow and earnings may be negatively affected once they start paying the penalties."

Kim has a "neutral" rating on the LCD industry.

The probe is the first in an industry that has grown 14 percent this year as consumers increasingly choose flat-screen televisions and computer monitors. Prices for a 40-inch LCD TV may fall 38 percent this quarter from a year earlier, research company DisplaySearch said.

LG.Philips, the world's second-largest LCD maker, fell 1.2 percent to close at a record 25,550 won (US$27.69) in Seoul, after sliding 4.3 percent yesterday. AU Optronics, the third biggest, dropped 1.2 percent to NT$42.10 (US$1.29). Sharp Corp, Japan's largest maker of LCD televisions, fell 1.5 percent to ?2,040 (US$17.43).

Samsung Electronics Co, the world's largest LCD maker, gained 0.3 percent. The company generates more than 90 percent of its operating profit from products other than LCDs, including semiconductors and electronics.

A four-year US probe into price fixing in the computer-memory chip market resulted in four companies, including Samsung Electronics, and 16 individuals being fined US$731 million.

Regulators and company executives didn't specify a timeframe for the LCD probe.

Chi Mei Optoelectronics Corp (奇美電子), Taiwan's fourth-biggest maker of flat-panel displays, said it is part of the investigation.

"Our subsidiaries in Japan and the US informed us earlier this week that they were requested by local regulators to provide information for the antitrust investigation on the sale of panels," Denis Chen (陳世賢), director of the finance and accounting department at Tainan-based Chi Mei, said by phone yesterday.

Chen declined to provide details on the probe.

Taiwan's Fair Trade Commission said yesterday that it would watch the development of the probe closely and investigate local LCD makers should there be evidence showing that they were involved in violation of the Fair Trade Act (公平交易法).

In a statement released yesterday, the commission said it had not received a request to assist in the probe, and that there was no evidence indicating that Taiwanese LCD makers had engaged in such activities.

Panel prices reported by the makers have been sliding over a period of time, indicating there was benign competition in the industry, the commission said.

According to DisplaySearch, the average price of a 40-inch LCD TV will decline 38 percent to US$1,889 this quarter from US$3,054 a year earlier. The cost of the same TV will fall to US$984 by 2009, the research company said.

Additional reporting by Jessie Ho

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