Stocks fall after Philips fires workers

Stocks fell yesterday on concerns demand for electronics remain depressed after LG Philips Displays said it will close two factories on in Taiwan as sales dropped.

Asustek Computer Inc (華碩電腦) and other electronic parts makers led declines.

The TAIEX fell 104.66, or 2.2 percent, to 4,739.16, after falling as much as 2.7 percent. Eight stocks fell for every one that rose. Trade yesterday was just off the year's low at NT$28.9 billion (US$840 million).

"We will need to see evidence of an improvement in demand, reflected in lower inventory levels, before the index can begin to make a sustainable move upwards," said Spencer White, the head of research at Merrill Lynch Taiwan Ltd.

The venture between Korea's LG Group and Royal Philips Electronics NV of the Netherlands said Tuesday it will also fire 1,200 workers in Taiwan as falling demand for computers and competition from flat-panel monitors hurt sales.

Electronic parts and computer makers fell after LG Philips, which says it's the biggest maker of color picture tubes for televisions and computers, said it plans to shut the factories at the end of July, putting 1,000 Taiwanese and 200 overseas employees out of work.

Asustek Computer, Taiwan's biggest motherboard maker, fell NT$2.50, or 1.7 percent, to NT$142.50. Hon Hai Precision Industry Ltd (鴻海精密), a maker of connectors and cable assemblies, fell NT$1.50, or 1 percent, to NT$147.50.

Acer Display Technology Inc, a maker of flat panel liquid crystal displays, fell NT$2.10, or 6.9 percent, to NT$28.30. Quanta Computer Inc, a notebook computer maker, fell NT$2, or 1.7 percent, to NT$115.50. Unipac Optoelectronics Corp (聯友光電), a maker of flat panel liquid crystal displays, fell NT$1.50, or 6.8 percent, to NT$20.70.

First Commercial Bank (第一商銀) fell NT$1, or 5.1 percent, to NT$18.80. Taiwan's third-biggest lender by market value said it will pursue a merger with Pan Asia Bank Co (泛亞銀行) after talks for a three-way combination with Dah-An Commercial Bank (大安商銀) stalled. Dah An fell NT$0.15, or 2.4 percent, to NT$6. Pan Asia fell NT$0.04, or 1.8 percent, to NT$2.25.

Lenders dropped on concern the government's efforts to reform the banking system is stymied by its insistence banks should keep lending even as banks try to lower their bad debt. China Development Industrial Bank　(中華開發工銀), Taiwan's biggest bank by market value, fell NT$0.90, or 3.3 percent to NT$26.70.

Chinatrust Commercial Bank (中國信託商銀), the second biggest, fell NT$0.90, or 3.7 percent, to NT$23.60. Hua Nan Commercial Bank (華南商銀), the fourth biggest, fell NT$0.70, or 3.5 percent, to NT$19.60.

China Steel Corp (中鋼) fell NT$0.10, or 0.6 percent, to NT$17. Taiwan's biggest steelmaker said it will hold talks with Japan's five largest steelmakers about investing in a new 700 billion yen (US$5.6 billion) mill to double its capacity.

China Steel said Chairman Kuo Yen-tu (郭炎土) and other executives will visit NKK Corp, Kawasaki Steel Corp, Nippon Steel Corp, Sumitomo Metal Industries Ltd and Kobe Steel Ltd after July 20.

China Steel's new mill would boost its capacity to more than 20 million metric tons a year, from output of 10.3 million tons last year.

United Microelectronics Corp (聯電) fell NT$0.50, or 1.1 percent, to NT$45.40. The world's second-largest maker of chips to other people's designs may close at least one of its nine plants as it faces a second-quarter loss and declining global demand.