Chunghwa Picture Tubes Ltd (中華映管), the nation’s No.3 LCD panel supplier, could face difficulty in selling a stake to strategic partners in exchange for a supply order, as growing signs indicate a reduced likelihood of supply constraints in the second half of the year, analysts said yesterday.
The comments came despite company chairman Lin Wei-shan’s (林蔚山) prediction that they “would have good news soon.”
The candidate would have to provide an outlet for the company’s capacity and be able to inject capital and provide opportunities for technological exchange, Lin told reporters on Tuesday.
Chunghwa Picture planned to cut capital shares by more than 60 percent last month to improve its financial structure. The Taoyuan-based company also planned to issue 2 billion new common shares at home or overseas and to issue as much as NT$20 billion (US$628.9 million) in corporate bonds via private placement to further improve its balance sheet.
That would open an opportunity for Chunghwa Picture to form a new strategic alliance, after forming such a partnership with the world’s largest notebook computer contract maker, Compal Electronics Inc (仁寶), which purchased a 20 percent stake in Chunghwa Picture for NT$7 billion in order to secure its PC panel supply last year.
Speculation continued that South Korea’s Samsung Electronics Co could be a potential investor of Chunghwa Picture, the Chinese-language Commercial Times newspaper reported on Wednesday.
“The possibility is slim, as supply will not be so tight as to force Samsung to make such an investment in the second half of the year,” said Roger Yu (游智超), an LCD industry analyst with Polaris Securities (寶來證券).
“This despite the fact that Chunghwa Picture is able to produce more cost-effective laptop panels from its 4.5-generation production lines,” Yu said.
Samsung would be unlikely to repeat the mistake of LG Display Co Ltd when it acquired a small share of another local panel maker, Hannstar Display Corp (瀚宇彩晶), to cope with anticipated supply shortages in 2008, which did not happen, Yu said.
Another analyst, who requested not to be named, also said he could not see sufficient reason for Samsung to make such an investment.
He said recent sagging demand for flat-panel TVs, especially LED TVs, from Samsung Electronics and Vizio Inc in the US could bode ill for demand in the second half, which is traditionally the peak season for TV sales.
He said he expected to see oversupply in the third quarter.
“Chunghwa Picture could turn to small Chinese TV makers to sell a stake, as the company has been selling small and medium panels to the market,” he said.
Yu also said Chunghwa Picture must urgently seek partnerships with Chinese TV companies to secure orders.
He added that he would “not expect to see any big names, if the deal was struck.”
Shares of Chunghwa Picture yesterday rose 1.75 percent to NT$2.3, under-performing the benchmark TAIEX, which jumped 2.21 percent.
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