Some Taiwanese liquid-crystal-display (LCD) panel makers are bracing for a bleak second quarter as weaker-than-expected demand for computers and TVs drove prices lower to approach their cost level, an industry analyst said yesterday.
The warning came after South Korean flat-panel maker LG.Philips LCD Co on Monday halved its earnings before interest, taxes, depreciation and amortization (also known as EBITDA margin) to around 10 percent of sales in the current quarter, down from the previous estimate of 20 percent.
LG.Philips LCD's revision came one week after AU Optronics Corp (友達光電), the world's third-largest LCD maker, halved its second-quarter shipment growth rate to less than 10 percent from the previous quarter.
The Taiwanese firm also predicted a 10 percent decline in prices this quarter.
FALLING PRICES
"Concerns [about possible losses in the current quarter] were raised among executives of [second-tier] Taiwanese companies as prices are dropping to near their costs," said Michael Wang (
In the middle of last month, the price of a 32-inch panel fell to around US$440 to US$450, compared to flat-panel makers' US$450 cost, said Frank Lee (
Wang said prices had declined at a faster rate largely due to the seasonal factor of sagging demand for computer monitors.
"Demand for TVs for the World Cup has also been disappointing," he said.
ANNUAL SHOW
Wang made the comments on the sideline of a press briefing for the annual flat-panel show FPD Taiwan 2006, which begins today and runs through Friday at the Taipei World Trade Center. Some 527 companies from home and abroad will showcase their latest products.
Weak demand and increasing output has prompted panel makers such as LG.Philips LCD and AU Optronics to announce plans to cut production.
Wang said that would be help deal with inventories, but that demand would still be the key for the flat-panel industry to get back on track.
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