Fri, Dec 12, 2008 - Page 12 News List

AUO to delay new plant construction

SLUMPING DEMAND The LCD panel maker had planned to build four factories over the next decade, but the economic downturn has forced it to push back its timetable


AU Optronics Corp (AUO, 友達光電), the world’s No.3 liquid-crystal-display (LCD) panel supplier, said yesterday that it would put off the construction of a new next-generation plant by six months at least as global economic slowdown curtails demand for PCs and consumer electronics, especially the larger sized TVs.

Boosted by the plan to slow capacity expansion, the share price of AU Optronics rose 3.75 percent to close at NT$23.5 yesterday — off a nearly 6 percent gain in earlier trading — while the benchmark TAIEX slid 0.07 percent.

“The company will postpone the construction of a next-generation factory by more than half a year and will leave some leeway to adjust [the timetable] based on market demand,” AU Optronics said in a statement filed with the Taiwan Stock Exchange.

The move is the latest in a slew of countermeasures by the company to combat industrial slump after customers tightened budgets amid the global economic downturn.

Sony Corp, one of AU Optronics’ customers, announced a restructuring plan on Tuesday that included cutting 8,000 employees as part of greater efforts to save ¥100 billion (US$1 billion) by March 2010.

AU Optronics said on Monday that it might reduce equipment utilization to 60 percent in the current quarter from the 70 percent estimated previously, citing curtailed demand because of the economic slump.

It announced a cut of 20 percent in October on new equipment spending for this year and next year.

The company’s latest statement came after the Chinese-language Economics Daily News yesterday quoted AU Optronics chairman Lee Kun-yao (李焜耀) as saying the company planned to postpone the construction of two plants in Erlin Township (二林) in Changhua County.

The company had planned to spend NT$400 billion (US$12 billion) on four next-generation factories within the next 10 years, making the county the company’s long-term manufacturing center, the government said in a press release in September.

Lee said the company might put off the construction of the first next-generation plant by at least six months. The plant was scheduled to start construction in the second half of next year, the government statement said.

In April, the company said it planned to begin operation of an 11th-generation plant between 2011 and 2022 to meet demand for LCD TV panels measuring at least 50 inches.

AU Optronics planned to cut 57-inch, 60-inch, or 65-inch panels used in TVs from motherglass proceessed from at new advanced plant, company officials told investors.

Shares of smaller rivals Chi Mei Optoelectronics Corp (奇美電子) and Chunghwa Picture Tubes Ltd (中華映管) rose by 0.5 percent and 6.99 percent respectively yesterday.

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