AU Optronics Corp (AUO, 友達光電), the world’s third-largest maker of flat panels, posted the weakest quarterly net profit in six quarters as corporations and consumers tightened spending on PCs and slim-screen TVs.
Net income plunged 96 percent to NT$860 million (US$25.83 million) in the July-September quarter, from NT$22.57 billion a year earlier. It was the lowest level since the second quarter of last year, during which the company made NT$5.92 billion, AUO said in a statement.
“We are not sure how long it will take for the industry to pick up from the U-shape trough. But, we are taking actions against this downturn,” vice chairman Chen Hsuen-bin (陳炫彬) told investors.
AUO plans to cut its capital spending for this year and next year by a combined 20 percent to less than NT$200 billion by pushing back the start of mass production of a new advanced line by one year to 2010, joining bigger rival LG Display Co Ltd’s step of slowing capacity expansion.
LG Display said earlier this month that it planned to more than halve its capital spending next year.
“AU Optronics’ reduction [in new spending on equipment] is bigger than I thought,” said a senior technology analyst with Macquarie Securities Ltd’s Taiwan branch who asked not to be named.
“That could lead to a supply shortage in the second half of next year when demand comes back, though the move may ease glut in the short run,” he said.
Macquarie had expected AUO to spend as much as NT$240 billion on capacity expansion this year and next. AUO also beat most overseas investors’ forecast of multibillion dollar losses. Macquarie has projected that the panel maker would have made more than NT$3 billion in losses.
In the third quarter, the average selling price for liquid-crystal-display (LCD) panels dropped 21 percent from last year to an average US$137 per unit, which drove gross margins down from 23 percent a year ago to 8 percent, as the weakening global economy reduced consumer consumption.
The firm said the fourth quarter could be a tougher period, citing vague prospects for new orders. Customers were conservative about Christmas holiday sales and more unwilling to build up inventories before the traditionally shopping season, it said.
To cope with the new industry slowdown, AU Optronics planned to lower its equipment loading rate by another 10 percentage points to 70 percent from 80 percent in the third quarter after a 10 percentage point drop.
“[Demand] looks not so good in the fourth quarter. We will follow our consistent policy of strictly controlling inventory as we used to do,” Chen said.
Reflecting lower factory usage, shipments of PC and TV panels may fall by 5 percent to 9 percent this quarter, from 20.72 million units in the third quarter, with TV panels making up almost half of the shipments, the company said.
Price for LCD panels used in PCs and TVs may drop by up to 13 percent quarter on quarter, it said.
Shares of AU Optronics shares and Chi Mei Optoelectronics Corp (奇美電子) both fell by nearly the 3.5 percent daily down-limit to NT$25.65 and NT$15.25 respectively, under-performing the benchmark TAIEX, which lost 2.72 percent.
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) secured a record 70.2 percent share of the global foundry business in the second quarter, up from 67.6 percent the previous quarter, and continued widening its lead over second-placed Samsung Electronics Co, TrendForce Corp (集邦科技) said on Monday. TSMC posted US$30.24 billion in sales in the April-to-June period, up 18.5 percent from the previous quarter, driven by major smartphone customers entering their ramp-up cycle and robust demand for artificial intelligence chips, laptops and PCs, which boosted wafer shipments and average selling prices, TrendForce said in a report. Samsung’s sales also grew in the second quarter, up
LIMITED IMPACT: Investor confidence was likely sustained by its relatively small exposure to the Chinese market, as only less advanced chips are made in Nanjing Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) saw its stock price close steady yesterday in a sign that the loss of the validated end user (VEU) status for its Nanjing, China, fab should have a mild impact on the world’s biggest contract chipmaker financially and technologically. Media reports about the waiver loss sent TSMC down 1.29 percent during the early trading session yesterday, but the stock soon regained strength and ended at NT$1,160, unchanged from Tuesday. Investors’ confidence in TSMC was likely built on its relatively small exposure to the Chinese market, as Chinese customers contributed about 9 percent to TSMC’s revenue last
LOOPHOLES: The move is to end a break that was aiding foreign producers without any similar benefit for US manufacturers, the US Department of Commerce said US President Donald Trump’s administration would make it harder for Samsung Electronics Co and SK Hynix Inc to ship critical equipment to their chipmaking operations in China, dealing a potential blow to the companies’ production in the world’s largest semiconductor market. The US Department of Commerce in a notice published on Friday said that it was revoking waivers for Samsung and SK Hynix to use US technologies in their Chinese operations. The companies had been operating in China under regulations that allow them to import chipmaking equipment without applying for a new license each time. The move would revise what is known
UNCERTAINTY: A final ruling against the president’s tariffs would upend his trade deals and force the government to content with billions of dollars in refunds The legal fight over US President Donald Trump’s global tariffs is deepening after a federal appeals court ruled the levies were issued illegally under an emergency law, extending the chaos in global trade. A 7-4 decision by a panel of judges on Friday was a major setback for Trump, even as it gives both sides something to boast about. The majority upheld a May ruling by the Court of International Trade that the tariffs were illegal. However, the judges left the levies intact while the case proceeds, as Trump had requested, and suggested that any injunction could potentially be narrowed to apply
RSS