Chimei Innolux Corp (奇美電子), the nation’s top LCD panel maker, plans to double its touch panel capacities this year to satisfy fast-growing customer demand ahead of the sale of Microsoft’s new Windows 8 operating system, a company executive said yesterday.
The capacity expansion is part of the company’s greater turnaround efforts as mobile displays are delivering positive gross margin, versus unprofitable PC and TV flat panels.
“The [upcoming] sale of Windows 8 brought a new wave of demand for ultra-slim computers,” company chairman and chief executive Tuan Hsing-chien (段行建) told a media briefing after the company’s annual shareholders’ meeting.
Photo: Chen Mei-ying, Taipei Times
“We are one of the leading [touch panel] suppliers. We have worked with clients to supply [touch panels] for a lot of products on display during the Computex [exhibition],” Tuan said.
Tuan also said the company’s business would be better in the second half of the year, compared with a year ago, if the global economy remained stable. Factory utilization, which has improved to a satisfactory level, would be higher next quarter than this quarter, he said.
This year, Chimei Innolux aims to have 220,000 sheets of touch mother glass, up from last year’s 100,000 sheets, by allocating two LCD panel plants to make touch panels instead, said Jeffrey Yang (楊弘文), an associate vice president in charge of the company’s touch panel business.
The Miaoli-based company budgeted as much as NT$3 billion (US$100 million) for the development of new in-cell and on-cell, or touch-on-display technologies to make thinner and lighter touch panels, targeting demand for mobile devices running the new Windows 8 system, Yang said.
That represented about 10 percent of the total capital spending of NT$30 billion this year.
The company is scheduled to ramp up production of on-cell touch panels in the second half, while in-cell touch panels are expected to start mass production next year, he said.
“We have high hopes for the touch panel market’s future [growth],” Yang said, on strong demand from tablets, Ultrabooks and smartphones.
To turn around its TV and PC panel businesses, Chimei Innolux will continue to develop new and improved margin TV displays after its 39-inch and 50-inch panels became popular among Chinese brand television vendors.
“The diversification in our product lineup will put us in a better position during the industry’s downturn. We also hope these new products will be profitable,” said Wang Jyh-chau (王志超), general manager of the firm’s Tainan operations.
Chimei Innolux said there was the chance the company will cooperate with Sharp Corp in manufacturing TV panels after its shareholder Hon Hai Precision Industry Co (鴻海精密) bought a nearly 10-percent stake in the Japanese company.
TV and PC flat panels accounted for 70 percent of the company’s total revenue of NT$485.4 billion last year, while panels used in mobile devices made up 15 percent.
Chimei Innolux’s loss ballooned to NT$64.44 billion (US$497.77 million) last year, from losses of NT$14.84 billion in 2010. Gross margin deteriorated to negative 9 percent last year, from negative 2 percent a year ago.
Shareholders yesterday approved a move to sell 2 billion new shares via private placement, or to issue NT$15 billion worth of bonds to improve financial structure and repay bank loans.
On Monday, the board also approved offering 60 million shares to raise funds to pay back bank loans and replenish operational capital.
Separately, Tuan said the company would discuss with high-ranking government officials from the Cabinet about giving financial aid to local LCD and semiconductor industries, which are of strategical importance for Taiwan.
“The government needs to do more” to boost competitiveness in the LCD industry, like the Chinese, South Korean and Japanese governments do, Tuan said.
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