Chimei Innolux Corp (奇美電子), the nation’s biggest LCD panel maker, yesterday said it was cutting its capital expenditure plans this year by up to 30 percent as a fragile economic recovery in the US and Europe curtailed demand.
The Miaoli-bsaed company originally budgeted NT$100 billion this year for new facilities and equipment.
“We plan to cut capital spending by 20 to 30 percent,” Lorea Chen (陳靜燕), an official from Chimei’s public relations department, quoted chief executive Tuan Hsing-chien (段行建) as saying after the company’s shareholders’ meeting.
As the company becomes more cautious about capital spending, plans to build an 8.5-generation plant in China to produce TV panels might be put on hold, Chen said by telephone.
That will put Chimei behind its local rival AU Optronics Corp (AUO, 友達光電), which is investing US$796 million in an 8.5G fab that Longfei Optoelectronics Co (龍飛光電) is building in Kunshan, Jiangsu Province, with commercial production slated for 2013.
Chimei would stick to its plan to expand its 8.5G plant in Kaohsiung, raising production capacity to 55,000 sheets by the end of the year, from 24,000 sheets at the beginning of the year.
“The macroeconomy is unfavorable. We all know how the US and Europe economies are,” Tuan said on Unique Broadcasting.
Chimei reported a smaller loss of NT$13.8 billion in the first quarter, compared with a loss of NT$24.13 billion in the final quarter of last year.
Asked about the company’s plan to spin off its fast-growing touch panel and mobile device panel businesses, Tuan said Chimei was still doing feasibility studies and had not brought up the issue during its board meeting.
He dismissed media speculation that the board had rejected the spin-off plans because the separation would jeopardize the interests of shareholders of Chi Mei Optoelectronics Corp (奇美電子).
In March last year, Innolux Display Corp (群創光電), Chi Mei Optoelectronics and TPO Display Corp (統寶光電) together created a new entity called Chimei Innolux.
“We are going back to our core business now. And TFT-LCD is our central business,” Tuan said.
Yesterday, Chimei shareholders approved the issuance of 1 billion shares in the form of global depositary receipts.
Separately, AUO yesterday launched its new LCD module plant in the Slovak Republic.
Slovakia will play a key role in the manufacture, assembly and sales of LCD TV modules for TV set makers in neighboring areas, AUO said in a statement.
The Slovakia plant is expected to turn out 240,000 LCD modules per month by the end of this year.
Chimei plunged 2.78 percent to close at NT$21 in Taipei yesterday, while AUO slid 0.26 percent to NT$19.35.
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