Fri, Jul 31, 2009 - Page 12 News List

Chi Mei expects growth in TV panel shipments

OUTPUT: To increase production at its 6G facilities, which primarily manufacture TV and monitor panels, Chi Mei plans to increase capital spending this year

By Elizabeth Tchii  /  STAFF REPORTER

Chi Mei Optoelectronics Corp (奇美電子), the nation’s No. 2 maker of flat panels, is optimistic about the outlook for the third quarter, projecting quarterly growth in shipments of between 15 percent and 20 percent for TV panels.

For shipments of medium to small-sized panels, it projected between 10 percent and 15 percent growth.

Chi Mei president Wang Jyh-chau (王志超) yesterday predicted average selling prices (ASPs) would also increase this quarter, rising between 10 percent and 15 percent from last quarter.

Chi Mei has suffered greatly since the third quarter of last year, when demand crumbled as a result of the global financial crisis.

“Moving forward, we are working on consolidating our supply chain to keep costs down, keeping informed on the competitive landscape and keeping our inventory levels down to stay flexible,” Wang told investors via teleconference.

Wang said the company was not planning to merge with rival AU Optronics Corp (友達光電).

Moreover, Chi Mei is halting plans to manufacture TV panels in China at a new 8.5 generation (8.5G) plant. The plan to jointly produce the panels with a Chinese company will be shelved until business stabilizes, he said.

However, Wang said the company would increase capacity at its 6G plants from 90,000 units to 120,000 units per month by December.

To increase production at its 6G facilities, which primarily manufacture TV and monitor panels, Chi Mei will increase capital expenditure to NT$40 billion (US$1.22 billion) this year.

It had planned to spend between NT$30 billion and NT$35 billion this year, Wang said.

The company budgeted NT$8.82 billion for capital spending in the second quarter, down from NT$10.78 billion in the first quarter.

Wang said he was enthusiast about the proposed economic cooperation framework agreement (ECFA) with China, as he believes local LCD companies would benefit greatly.

“We are still waiting for the government to set up concrete guidelines so we can proceed. In addition, we have not ruled out possible collaboration with Chinese upstream or downstream partners to expand our market share,” Wang said, responding to an analyst’s question.

Chi Mei controls between 35 percent and 40 percent of the TV panel market in China, Wang said.

Although Chi Mei’s second-quarter revenue surged 58.8 percent from the first quarter to NT$70.28 billion, the company still saw a loss of NT$8.84 billion for the quarter, the company’s finance director Denis Chen (陳世賢) said.

Chen did not disclose when the flat panel producer expected to turn a profit, but he said sales would improve month-on-month and the company was keeping inventory near their first-quarter level.

In the three months ending last month, Chi Mei shipped 19.13 billion units — a record for the company — while ASPs increased to US$106 from US$94 in the first quarter, Chen said.

The company’s sales breakdown for the second quarter remained the same as the first quarter, with TV panels accounting for 55 percent of sales, followed by desktop computer panels at 33 percent, laptop screens at 8 percent and small and medium-sized panels at 4 percent.

The sales breakdown by panel size showed a slight increase in panels more than 36 inches wide in the second quarter, the company said.

Shares of Chi Mei dropped 0.27 percent to close at NT$18.65, before the company’s teleconference. The stock has surged 72.69 percent so far this year compared with a rise of 53.06 percent on the TAIEX.

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