LCD panel maker Chunghwa Picture Tubes Ltd (CPT, 中華映管) yesterday said it plans to launch a series of streamline measures, including factory shutdown and job cuts, in an effort to save costs and improve operational efficiency to weather an industrial slump.
The company plans to close down a 4.5-generation (4.5G) plant in Taoyuan’s Longtan District (龍潭) this month due to sluggish demand for flat panels used in smartphones, the company said in a filing with the Taiwan Stock Exchange yesterday.
“As one of the company’s two 4.5G plants focused on making flat panels used in smartphones, the factory suffers the brunt of falling prices for smartphone panels. The company has to shut down the factory to reduce the impact on corporate profitability,” CPT said in the statement.
Workers at the affected plant are to be allocated work at another 4.5G plant and join rotational shifts there, CPT said.
CPT has also inked an agreement to sell a fourth-generation (4G) plant to its panel-making subsidiary Giantplus Technology Co (凌巨科技) for NT$1.8 billion (US$55 million) to improve operational efficiency and boost competitiveness. CPT holds 53.67 percent stake in Giantplus.
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CPT has submitted a layoff plan to Taoyuan’s labor agency to cut 525 workers at the 4G plant. Giantplus is to hire an unspecified number of those workers, CPT said.
“By integrating [component] supply chain and sharing technological resources, the companies can rapidly improve operations and to enhance competitiveness,” CPT said.
The transaction is expected to be completed in January.
CPT said it has been gradually shifting its business to producing better-margin flat panels used in cars. The company expects shipments of car displays to grow 16.5 percent to 12 million units this year, up from last year’s 10.3 million units.
As part of the company’s efforts to turnaround profits, CPT yesterday set up a new business division to produce flat panels used in the industrial sector, making displays for medical devices and gambling machines.
Separately, Giantplus yesterday said net profits soared to NT$347 million last quarter, compared with NT$47 million in the second quarter. That translates into earnings per share of NT$0.79 last quarter, up from NT$0.11 a share.
Gross margin rose to an eight year high at 13.9 percent last quarter, from 10.4 percent the previous quarter. The company attributed the improvement to higher a contribution from niche panels.
CPT shares plunged 4.65 percent to NT$0.82 yesterday, underperforming the TAIEX, which gained 0.71 percent.
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