Chi Mei Optoelectronics Corp (CMO, 奇美電子), the nation’s second-largest liquid-crystal-display (LCD) panel maker, yesterday said operations hit rock bottom last month amid the latest slump driven by oversupply and a steep decline in demand on economic weakness.
Two weeks ago, the Tainan-based company told investors that last month might be the worst period for CMO as early signs indicated a tepid recovery in orders.
“As of mid-August, we are quite sure that our previous forecast is correct. July is the bottom ... Decline in panel prices are improving,” company president Ho Jau-yang (何昭陽) told reporters yesterday.
But, Ho said he was not sure when the downcycle would end.
“The pattern has changed this time. Macroeconomic weakness has complicated the problem,” Ho said.
A weak global economy, which affected consumer purchases of electronic devices, played a bigger role than overcapacity in driving the industry into the new downcycle, Ho said.
It would take time to see a recovery in consumer confidence, though oil prices have fallen recently, he said.
Rising oil prices have caused inflation around the globe.
CMO would stick to its plan of cutting production by 20 percent this month with an additional 15 percent reduction next month, in order to counter price drops by reducing supply, Ho said.
CMO retained its outlook for the third quarter. Shipments of PC and TV panels may be flat or drop 5 percent quarter-on-quarter in the July-September period, the company said late last month.
Average selling price for computer and TV panels may drop 10 percent to 15 percent quarter on quarter.
To cope with the recent downtrend, CMO has put off plans to build a new panel module assembling plant in Vietnam and it has no timetable for resumption yet, Ho said.
“Because of the macro environment we are conservative about future investment,” Ho said.
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