Chimei Innolux Corp (奇美電子) and AU Optronics Corp (AUO, 友達光電), two of the nation’s leading flat-panel makers, reported a decline in sales for last month because of falling product prices.
Chimei Innolux said on Friday it posted NT$41.47 billion (US$1.36 billion) in consolidated sales last month, down 1.3 percent from August and down 9.1 percent from a year earlier.
AUO recorded NT$32.92 billion in consolidated sales last month, down 1.1 percent from a month earlier and down 21.6 percent from a year ago.
In the third quarter, Chimei Innolux’s sales totaled NT$124.70 billion, up 2.5 percent from the second quarter, while AUO’s revenue was up 0.9 percent from the previous quarter at NT$98.93 billion.
According to market researcher DisplaySearch, prices of LCD monitors and panels for notebook computers remained flat early this month, but TV screens faced downward pricing pressure.
DisplaySearch said flat-panel makers have been selling products at prices below production costs and such pressure is mounting amid a supply glut.
Grand Cathay Investment Service Corp (大華投顧) agreed, saying that TV panel prices fell 13 percent during August and last month, and continued to weaken this month.
Chimei Innolux and AUO may incur further losses under such unfavorable circumstances, Grand Cathay said.
In the first half of this year, AUO incurred a net loss of NT$24.66 billion, compared with NT$18.52 billion in net profit a year earlier, while Chimei Innolux posted a NT$27.05 billion net loss, compared with NT$13.34 billion in net profit a year ago.
In addition to the impact from falling product prices, Grand Cathay said, AUO may have to shoulder losses from its investments in the solar energy business overseas for the third quarter, while Chimei Innolux, which shipped more TV panels than AUO, is likely to report larger losses than its rival in the quarter.
Despite major LCD panel makers’ efforts to scale back their capital expenditure and lower capacity utilization, the extended industry downturn has prompted Taiwan Ratings Corp (中華信評), the local arm of Standard & Poor’s Ratings Services, to lower Chimei Innolux’s credit ratings on concerns about the company’s profitability and cash flow into next year.
On Friday, Taiwan Ratings cut Chimei Innolux’s long-term and short-term corporate credit ratings to “twBBB/twA-3” from “twBBB+/twA-2,” the agency said in a statement. A cut in corporate ratings could increase the company’s borrowing costs.
“A prolonged industry downturn, which may extend significantly longer than our earlier expectation, is likely to constrain improvement in Chimei Innolux’s weak profitability and cash flow over the next two to three quarters,” the statement said.
At the end of June, the company had NT$74.2 billion in cash and liquid financial assets, with unused medium-term credit facilities totaling about NT$27.4 billion. The company has NT$69.5 billion of long-term debt due in one year, Taiwan Ratings said.
Chimei Innolux’s slow progress in reaping the synergy benefits of its three-in-one merger — in which Chi Mei Optoelectronics Corp (奇美電子), Innolux Display Corp (群創光電) and TPO Displays Corp (統寶光電) merged in March last year — was also cited by the ratings agency as a factor that restrains the company’s profitability over the next two to three quarters.
Additional reporting by Kevin Chen
‘BIG LOSS’: This year might see the last generation of Huawei’s Kirin chips, as their production would stop next month because they are made using US technology Chinese tech giant Huawei Technologies Co (華為) is running out of processor chips to make smartphones due to US sanctions and would be forced to stop production of its own most advanced chips, a company executive has said, in a sign of growing damage to Huawei’s business from US pressure. Huawei, one of the biggest producers of smartphones and network equipment, is at the center of US-Chinese tension over technology and security. Washington last year cut off Huawei’s access to US components and technology, and those penalties were tightened in May, when the White House barred vendors worldwide from using US
’WHITE BOX’: The open platform would give local firms access to Cisco’s cloud-based mobile network to develop 5G telecom equipment and tap into the global market The Ministry of Economic Affairs (MOEA) yesterday introduced a new 5G “open lab” in collaboration with US-based information technology and networking giant Cisco Systems Inc to address the rapidly growing “white box” 5G networking equipment market. The open lab will be a platform where Taiwanese manufacturers can access Cisco’s cloud-based mobile network to develop their own 5G telecom equipment, such as small-cell base stations, network switches, modems and Internet of things (IoT) devices, a ministry statement said. The open platform would allow Taiwanese manufacturers to tap into the lucrative 5G telecom equipment market, which was previously monopolized by Nokia Oyj, Ericsson AB
CORPORATE SCANDAL: Cathay Life has invested NT$13.3 billion in Bank Mayapada since 2015, but the latest loss of NT$8.8 billion has completely written off its investment Cathay Life Insurance Co (國泰人壽) yesterday said it would recognize an investment loss of NT$8.8 billion (US$298.1 million) in Indonesia’s Bank Mayapada Internasional Tbk PT due to concerns about the lender’s operations amid a corporate scandal. The company said it would revise its earnings result for June, from a net profit of NT$6.52 billion to a net loss of NT$520 million, its first monthly loss over the past 17 months. After booking an investment loss of NT$5.2 billion in Bank Mayapada earlier this year, Cathay Life has so far recognized total investment losses of NT$14 billion in the lender, executive vice president
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) yesterday reported that revenue last month expanded 25 percent annually, but fell 12.8 percent month-on-month to NT$105.96 billion (US$3.59 billion). In the first seven months of this year, the chipmaker’s revenue surged 33.6 percent to NT$727.26 billion, compared with NT$544.46 billion a year earlier. TSMC has said it aims to grow its revenue by more than 20 percent this year. The company has since May 15 stopped taking new orders from Huawei Technologies Co (華為), its second-biggest customer after Apple Inc, due to the US’ restrictions on exports containing US technologies. TSMC has no plans to