Mon, Jul 28, 2008 - Page 12 News List

LG Display to cut LCD output

SUPPLY GLUT After watching its shares drop 37 percent this year, the troubled South Korean LCD-maker announced it had begun production cuts on Friday

STAFF WRITER, WITH BLOOMBERG AND AFP

LG Display Co, the world’s second-largest maker of liquid-crystal displays (LCDs), plans to reduce its panel output by about 10 percent by the end of next month, following similar moves by its Taiwanese rivals last week amid a global supply glut and falling prices.

AU Optronics Corp (友達光電) and Chunghwa Picture Tubes Ltd (中華映管) said last week that they would cut down on production in the short term to reflect the current state of oversupply, owing mainly to weaker-than-expected demand attributable to the global economic downturn.

LG Display spokesman Park Sang-bae said the Seoul-based company started the cuts on Friday and would continue the lower production throughout next month.

“Amid uncertainty in the market, full operation will lead only to rising inventory,” Park said yesterday in a telephone interview in Seoul. “So, we took the measure to brace for such market conditions in advance.”

The Yonhap news agency first reported LG Display’s planned production cuts yesterday, quoting an official from the company and industry sources.

The company forecast earlier this month its third-quarter profitability would fall more than analysts estimated on declining panel prices. LCD prices will probably decline this month and next, chief financial officer James Jeong said on July 9, citing weaker-than-expected demand.

With global LCD panel prices dropping more than 10 percent month-on-month this month amid oversupply, figures from display market researcher DisplaySearch show AU Optronics, the world’s third-largest LCD maker, said on Thursday that it would reduce production by 10 percent this quarter.

Chunghwa Picture may also join AU Optronics and Chi Mei Optoelectronics Corp (奇美電子) to lower production in the short term to reflect the current market situation, the Chinese-language Commercial Times and Apple Daily newspapers reported on Friday, citing chairman Lin Wei-shan (林蔚山).

Lin did not specify the amount of production cuts but the company is speculated to shed more light on the cuts at its quarterly conference to investors on Tuesday, the newspapers said.

Lin said the flat-panel prices would stabilize in two months if both Samsung Electronics Co and LG Display also agreed to lower their production, the papers said.

But Samsung Electronics, the world’s largest LCD manufacturer, has said it has no immediate plan to cut down on the producing of its flat-screen panels.

Shares of AU Optronics have dropped 36.07 percent so far this year to close at NT$40.6 on Friday on the Taiwan Stock Exchange as investors showed concern over the industry glut. Smaller rival Chi Mei Optoelectronics has also seen its shares decline 40.2 percent to NT$27.2 over the same period of time.

In Seoul trading, shares of LG Display have fallen 37 percent this year, while Samsung Electronics shares have increased 3.6 percent this year.

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