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Chunghwa Picture puts faith in smaller panels

Chunghwa Picture Tubes Ltd (中華映管), the nation's third-largest liquid-crystal-display (LCD) panel maker, yesterday said it planned to more than double the production of high-margin small and medium sized screens next year to meet fast-growing demand.

Instead of investing in next-generation fabs to make television screens, Chunghwa Picture is aggressively expanding its presence in the small and medium sized LCD panels sector to minimize the impact of the industry's high volatility.

"It is more profitable for us to sell small and medium sized panels," said James Wu (巫俊毅), financial executive of Chunghwa Picture.

The gross margins are between 20 percent and 30 percent, Wu said.

Small and medium sized panels accounted for approximately 10 percent of the company's total revenues, he said. Computer panels made up 70 percent.

Benefiting from recovering demand, panel makers recently hiked prices, with the biggest rise -- approximately 10 percent to 15 percent when compared to the previous quarter -- for small and medium glass substrates, market researcher DisplaySearch said.

Chunghwa Picture plans to allocate more capacity at a less advanced factory to making LCD screens used in consumer electronics, including mobile phones and portable DVD players, Wu said.

That would raise the production of these panels to more than double this year's 53 million units, said Brian Lee (李學龍), a vice president at the company.

"Demand for digital photo frames, portable DVD players and automobile display panels is growing rapidly," Lee said.

Shipments of the panels rose 18 percent month-on-month to 5.03 million units in May, the company said.

"We returned to profit last month, aim to break even this quarter and return to profit in the third quarter," Wu said.

The company does not plan to expand production capacity for TV panels in the near term, citing a slim gross margin.

Chungwha Picture makes 280,000 TV panels a month, mostly 32-inch and 37-inch, at a sixth-generation plant.

Since the beginning of the year, Chunghwa Picture shares have risen 24 percent, closing yesterday at NT$8.72, outperforming the 6.7 percent gain on the benchmark TAIEX index during the same period.

Shares of other small-sized panel makers Wintek Corp (勝華科技), the world's No. 4 mobile phone screen supplier, and Giantplus Technology Co (凌巨科技) also rose 12.4 percent and 90 percent to NT$35.30 and NT$47.30, respectively, during the same period.

To expand capacity and its market presence, Wintek bought a less advanced manufacturing plant from local panel maker HannStar Display Corp (瀚宇彩晶) in a deal worth NT$6.1 billion last year.
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