Tatung Co (大同), the nation's fourth-largest electronics manufacturer, said it expects to turn profitable by next year, helped by rising sales at its flat-panel display unit Chunghwa Picture Tubes Ltd (中華映管).
"We are approaching break-even for the year," Tatung president Lin Wei-shan (林蔚山) said in an interview before the company's annual shareholders' meeting.
"We are looking for strong growth in the second half," he said.
Tatung's forecast adds to growing evidence of improvement in the US$33 billion flat-panel display industry, dominated by companies in South Korea and Taiwan.
The SARS outbreak has slowed construction of new flat-panel factories in Asia, curbing excess supply and supporting prices, market researcher DisplaySearch said last week.
Companies are stepping up production of the screens, used in televisions, computers and other electronic products, as they increasingly replace bulky glass tube-based displays.
"We don't expect a serious industry oversupply over the next few quarters," said George Chang, an analyst with Citigroup Global Markets Securities, in a research report.
"We are looking forward to a better-than-expected second half," he said.
Tatung, which makes everything from rice cookers to semiconductors, owns 60 percent of Chunghwa Picture, the nation's third-largest flat-panel maker. Tatung and Chunghwa Picture both recorded annual losses last year and in 2001.
The shares have gained 16 percent this year after plunging 64 percent last year. Tatung shares dropped NT$0.10 or 1.4 percent, to NT$7.15.
Shares of AU Optronics Corp (
Shares of Chi Mei Optoelectronics Corp (奇美電子), the country's second-largest maker, gained NT$1.30, or 5 percent, to NT$27.10.
Chunghwa Picture turned profitable last month as sales of flat panels used in televisions and computers rose, Lin said.
The display maker, which has said it plans to raise $478 million through share and bond sales over the next year for expansion, will introduce new products including plasma-display screens used in airports and hotels, he said.
Tatung plans to split Chunghwa Picture into two separate companies, one producing cathode-ray-tube displays and one making liquid crystal displays, Lin said. Tatung wants to find a venture partner for the cathode ray tube business before going ahead with the reorganization.
Chunghwa Picture forecast in April it will post a net loss of NT$3.9 billion this year, after losses of NT$3.1 billion last year and NT$6.5 billion in 2001.
Most flat-panel suppliers will make profits in the current quarter, DisplaySearch said in a report on Thursday.
Construction of production lines has been delayed after Japanese equipment suppliers canceled trips to Taiwan and China because of the outbreak of SARS, DisplaySearch president Ross Young said in an interview last week.
SARS could keep prices up and the industry healthier than anticipated in the second half, Young said.
Analysts and investors have predicted second-half losses for most suppliers as prices fall after new supply comes on stream.
Prices will still decline in the second half, Young said last week. He forecast the price of a 17-inch display, which may become the most widely used screen for personal computers this year, will drop by 11 percent by December, while benchmark 15-inch screens will fall 9 percent.
Samsung Electronics Co is the world's largest flat-panel maker.
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