AU Optronics expects flat-panel market to rebound next quarter

AU Optronics Corp (AUO, 友達光電), the world's third-biggest maker of flat panels, expects the market to rebound next quarter amid a faster-than-expected recovery in demand.

"Customers are aggressively building up inventory," AUO chairman Lee Kun-yao (李焜耀) told reporters after a media tour of the company's first 7.5-generation (7.5G) fabrication plant in Taichung. The company is also constructing a second 7.5G plant there.

The inventory buildup is seen to be a reflection of a growing consensus among industry players that the current glut would ease off in the second half of the year, the Hsinchu-based company said.

"The inventory buildup will accelerate the industry's revival," Lee said.

Rival Chi Mei Optoelectronics Corp (奇美電子) said earlier that it expected the industry to pick up momentum in the third quarter.

But Frank Su (蘇穀祥), a liquid-crystal-display (LCD) industry analyst with BNP Paribas Securities, said in a report released on Tuesday that he did not expect the low season to blow over until late next month.

AUO president Chen Hsuen-bin (陳炫彬) said yesterday that demand had picked up faster than the company expected, especially for LCDs used in notebook computers, 42-inch slim-screen TVs and other consumer electronic devices such as digital cameras.

LCD panel prices are expected to stabilize, or even edge up in the second quarter, Chen said.

Chen added that prices may hold up through the second half, including prices for TV panels, which are currently in a free fall.

Despite clearer signs of an industry uptick, AUO remained cautious about expanding capacity.

"We will increase capacity based on market demand," Chen said in response to questions on whether AUO would be able to match a rival's move to speed up construction of its second 7.5G plant and a next-generation, or 8G, plant.

The company's second 7.5G plant will be as big as nine football fields, Chen said. No timetable has been set yet for its commercial operation, he added.

The first 7.5G fab is able to process 22,000 sheets of 1,950mm X 2,250mm glass substrates, which can be cut into eight panels of 42-inch TV screens.

The company has three plants in Taichung, employing a total of 6,700 workers, in addition to nine other plants in northern Taiwan.