LCD panel maker Chunghwa Picture Tubes Ltd (CPT, 中華映管) yesterday reported its 12th consecutive quarterly loss as prices for slim-screen panels for televisions and computers dropped on sluggish end demand.
The company added that outlook for the third quarter remained sluggish, with demand expected to fall below the seasonal norm.
However, Chunghwa Picture said it has no plans to cut its capital spending this year of between NT$2 billion (US$69 million) and NT$2.5 billion, which would be used to improve its equipment to produce high-definition flat panels used in tablet devices and smartphones.
Earlier this week, its bigger local rival, AU Optronics Corp (友達光電), said it planned to slash capital spending by 30 percent.
In the quarter ending June 30, Chunghwa Picture’s losses widened to NT$3.13 billion from losses of NT$2.33 billion in the first quarter. The Taoyuan-based company posted losses of NT$1.5 billion in the second quarter of last year.
“Market demand, especially for TVs and IT products [computers], slumped in the first half. Oversupply caused panel prices to drop further,” company president Lin Sheng-chang (林盛昌) said during a teleconference with investors.
“As the visibility for IT panels is unclear, we will make inventory management our priority,” Lin said.
Days of inventory increased to 37 days last quarter from 31 days in the first quarter, the company said.
The fragile economic recovery in the US and Europe is expected to curtail demand for consumer electronics, while demand for notebook computers should pick up slightly after new models hit the shelves, Chunghwa Picture said.
To combat these difficult times, Lin said the company would have to accelerate its shift to high-margin products, such as tablet panels, touch sensors and smartphone screens, in the second half.
Its newly formed strategic partnership with the world’s biggest e-paper display supplier, E Ink Holdings Inc (元太科技), will help it reach this goal, Lin said.
Last week, E Ink agreed to spend NT$1.5 billion to subscribe to Chunghwa Picture bonds. Chunghwa Picture agreed to supply LCD panels to E Ink.
Besides e-paper displays, E Ink also supplies high-definition flat panels to LG Display and tablet device makers.
Shipments of LCD panels used in smartphones, tablets and consumer electronics should grow by 20 percent to 25 percent in the second half, from 200 million units shipped in the first half, Lin said.
Last quarter, revenues from small-and-medium LCD panels used in tablets and smartphones accounted for a larger share, 42 percent, of Chunghwa Picture’s total revenues of NT$15.93 billion, from 37 percent in the prior quarter, according to the company’s financial statement.
Chunghwa Picture also said it would terminate its money-losing cathode-ray-tube (CRT) business. The company plans to revamp its CRT factories in Malaysia and in Fuzhou, Fujian Province, and shift to touch panel assembly.
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