Fri, Nov 21, 2008 - Page 12 News List

No plan to halt production: Chi Mei

BUY-BACK SCHEME To repay short-term debt and raise more working capital, the Chi Mei board yesterday approved a proposed NT$4 billion fund-raising plan

By Lisa Wang  /  STAFF REPORTER

Chi Mei Optoelectronics Corp (奇美電子), the nation’s second-largest liquid-crystal-display (LCD) panel maker, yesterday said it had no plans to shut down factories to lower production amid industrial the slump.

The announcement was meant to dispel speculation that Taiwanese LCD panel makers may be considering drastic measures to survive the latest downturn.

This followed a trimming of output by around 20 percent last quarter after panel prices collapsed on contracting demand in September.

“We currently do not have any plan [to close factories] as reported by the media,” Chi Mei said in a filing to the Taiwan Stock Exchange, dismissing a report by the Chinese-language newspaper the Economic Daily News.

Chi Mei and smaller rival Chunghwa Picture Tubes Ltd (中華映管) were considering suspending two less-advanced plants to cut output and save costs, the report said.

Chi Mei, however, said that shrinking demand had caused a decline in factory production and employee working hours. It has also encouraged employees to take unpaid vacations.

Last month, the Tainan-based company said utilization of the existing seven factories may drop to between 60 percent to 70 percent on average and from 80 percent in the third quarter.

Chunghwa Picture also said it had no plan to shut down any factories; instead the company was reducing factory utilization as part of aggressive cost-saving efforts, a company statement filed to the Taiwan Stock Exchange said.

Chunghwa Picture and Chi Mei posted total losses of NT$10.27 billion (US$307 million) for the July-to-September period as prices plunged.

With no clear signs of a recovery in demand, prices for LCD panels used in computers and televisions were expected to slide further this month across the board, a report released yesterday by Austin, Texas-based market researcher DisplaySearch said.

The price of a benchmark 19-inch wide-format LCD panel for PC monitors may decrease by 4.3 percent to US$67 in the second half of this month from two weeks ago, while a 32-inch LCD TV panel may plunge nearly 9 percent to US$205 during the same period, the researcher said.

“Panel makers are operating with losses, and some of them are still struggling with inventory issues and are dumping the [PC monitor] panels at very low prices as they are desperate for cash,” DisplaySearch said in the report.

To repay short-term debt and raise more working capital, the Chi Mei board yesterday approved the proposed NT$4 billion fund-raising plan. Chi Mei plans to raise the fund by issuing corporate bonds at home.

Besides, the board also gave the go-ahead to a share buyback plan yesterday. Chi Mei plans to repurchase 600 million common shares, or about 6.81 percent of overall capital shares issued, during the two-month period starting today.

The panel maker plans to buy back shares at prices ranging from NT$6.6 and NT$20.55 each, Chi Mei said in a filing submitted to the Taiwan Stock Exchange.

Shares of Chi Mei fell 5.85 percent to NT$8.21 yesterday, under-performing the benchmark TAIEX, which lost 4.53 percent.

Chunghwa Picture and the nation’s biggest LCD panel maker AU Optronics Corp (友達光電) dropped 6.84 percent and 4.64 percent, respectively, yesterday.

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