AU Optronics Corp (AUO, 友達光電), the nation’s No. 2 LCD panel maker, yesterday posted bigger quarterly losses as stagnant TV demand in North America and Europe unexpectedly drove down TV panel prices.
The Hsinchu-based company also said Japan’s March 11 earthquake and tsunami shut down its Japanese polysilicon subsidiary M.Setek Co’s operation in the hardest-hit area, incurring NT$400 million (US$14 million) in losses in just a month, and the situation would not fully recover until October because of power shortages in that nation.
Net losses widened to NT$13.9 billion in the first quarter of this year, from NT$11.34 billion in losses in the previous quarter, joining its bigger rival LG Display Co in reporting losses. AUO posted net profits of NT$7.27 billion in the first quarter of last year.
The price of LCD TV panels fell about 3 percent on a quarterly basis to US$191 per unit last quarter from US$197 per unit, rather than holding steady as AUO originally thought. The price decline was a 21 percent drop from a year go.
AUO said it was seeing some positive signs indicating a gradual rebound — as Chinese customers rebuild inventories to cope with better-than-expected demand for that nation’s Workers’ Day shopping season and new orders, helping push demand up by 10 percent this quarter from last quarter.
“The first quarter should be the trough of this cycle and we hope the company’s operations will improve quarter by quarter this year,” acting president Max Cheng (鄭煒順) told an investor conference.
After a prolonged pricing decline, “LCD panel makers are reaching strong consensus about raising prices. The prices last quarter were unable to motivate panel companies to manufacture more products,” AUO vice president Paul Peng (彭雙浪) said.
AUO expects TV panel prices to bounce back next month, thereby helping stabilize TV panel prices for the whole second quarter.
Meanwhile, prices for computer panels are expected to rise by a high single digit this quarter, helped by a spike in shipments of tablet panels, following a 3.8 percent uptick last quarter to US$55 per unit.
Improving demand also reflects growing shipments. LCD TV and PC panel shipments are expected to grow by high single digit percentage points from 28 million units in the first quarter, bringing the equipment-loading rate to between 85 percent to 90 percent from less than 85 percent last quarter, AUO said.
AUO also said yesterday it would seek to invest in an unspecified Chinese panel maker that has received Beijing’s approval to build a 8.5G plant to make TV panels instead of building a less advanced 7G plant on its own.
The company could put off mass production at the as yet unbuilt Chinese plant from the fourth quarter of next year — as previously scheduled — citing slowing demand of TVs in China.
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