The steep depreciation of the South Korean won this year has helped South Korean panel makers boost exports and surpass Taiwanese producers, making South Korea the world’s largest producer of flat panel displays after local panel makers cut production last quarter in response to falling demand.
The won has depreciated by nearly 60 percent against the US dollar this year, while the New Taiwan dollar depreciated by only 3 percent in the same period, giving South Korean panel manufacturers a distinct advantage over their Taiwanese competitors.
According to DisplaySearch, a leading flat panel display market research firm, the Taiwanese market share for large panels dropped to 43.5 percent in the third quarter from 47.5 percent a year earlier, while Korean companies took the leading position by jumping to 43.8 percent from 39.7 percent.
Amid global economic turmoil, the panel industry faced a sharp drop in demand last quarter, leading to deep price cuts for panels of all sizes. Taiwanese panel makers were forced to slash production in the peak season for the first time.
The Austin, Texas-based research firm said production volume for panels worldwide plummeted by an average 84.5 percent, most of which involved Taiwanese panel makers. South Korean firms, however, managed to maintain a relatively high capacity utilization rate.
Taiwanese panel makers have begun to halt production to avoid further losses, while South Korean companies are still making profits as a result of the slumping won.
The difference is clear in gross margins from last quarter. In the past, even when the economic climate was bad, Taiwan’s top two flat panel makers — AU Optronics Corp (AUO, 友達光電) and Chi Mei Optoelectronics Corp (CMO, 奇美電子) — posted higher gross margins because of better management.
But South Korea’s LG Display Co, the world’s second-largest maker of liquid-crystal displays, reported a gross margin of 13 percent in the third quarter of this year, while AUO’s and CMO’s gross margins fell to 8 percent and 3 percent respectively. Chunghwa Picture Tubes Ltd (中華映管), the third-largest flat panel maker in Taiwan, also suffered losses.
A local panel maker said the situation would continue in the fourth quarter as local firms have next to no room to cut production again, with their capacity utilization rate falling on average to beneath 50 percent. Korean firms are said to be holding at 70 percent to 80 percent.
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