Quanta Display Inc (
"It is mainly for inventory control," Tsai Chuan-chuan (蔡娟娟), a spokeswoman at Quanta Display, said in a telephone interview, without providing details on the size of the reduction. The cuts were made at Quanta's 3.5th-generation and 5th-generation facilities, she said. The two plants make small and medium-sized panels used in mobile phones, personal-computer monitors and flat-screen televisions.
"I think the severity of the downturn in the second quarter was underestimated," Nicholas Teo, an analyst at Macquarie Research said in a telephone interview.
Quanta Display, based in Taoyuan, has three plants with combined capacity of 293,000m2 of panels a month, compared with AU Optronics nine production lines that can produce 900,000m2 a month. Quanta Display also has a 6th-generation factory, which produces 32-inch and 37-inch panels used in flat-screen TVs.
The cuts at Quanta Display were made after consultation between the two companies, while AU Optronic's production remains unchanged, Max Cheng (鄭煒順), chief financial officer at the Hsinchu-based company, said, according to a spokesman.
"Currently our fab loading is kept at 95 percent," said Cheng.
"Our principle is not to have inventory. If we have more orders then we will have more loading," he said.
The production cuts at Quanta Display also came after an AU Optronics executive said late last month that the company may reduce its panel shipments to avoid further price erosion.
Hsiung Hui (熊暉), a vice president of AU Optronics, said on May 25 at a DisplaySearch forum in Taipei that the company also hoped its peers would follow suit in order to prevent excessive inventory from further bringing down panel prices.
Hsiung said at the time that the company would see a weakened second-quarter earnings from the first quarter's NT$6.65 billion (US$207 million) as bigger-than-expected decline in panel prices due to high inventory would outpace its cost-saving efforts.
Shares of AU Optronics fell 2.1 percent to NT$46.2 yesterday on the Taiwan Stock Exchange.
AU Optronics, the world's third-largest maker of LCD panels, announced on April 7 its plans to acquire Quanta Display. The deal is subject to the approval of AU Optronics shareholders, who meet on June 15, and the target date for completion is Oct. 1.
The acquisition would make AU Optronics the world's largest maker of large-size LCD panels, based on first-quarter shipments, according to figures compiled by the company.
additional reporting by Lisa Wang
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