Ken King has room for only flat-screen monitors as he arranges the shop window at Lan Creator, a personal computer outlet at Taipei's Kuanghwa Computer Market (光華商場). The days of bulky, box-like monitors are over, he says.
"Families are replacing traditional screens with LCDs because they have no radiation and won't make kids short-sighted," says King. "Companies are buying LCDs because they take up less space." Although Lan Creator hasn't stopped selling CRT monitors altogether, its focus has shifted to flat screens.
Concerned about rising unemployment, many Taiwanese are upgrading old PCs with sleeker screens rather than buying a new one.
That doesn't bode well for cathode ray tube monitor makers such as ADI Corp (
"ADI and Mag have no way to face the industry downturn," said Bryan Chiang, who manages about NT$500 million (US$14.4 million) in stocks at Grand Pacific Securities Investment Trust Ltd (中信投信). "People are buying LCDs." The price of the industry standard 15-inch LCD screen nearly halved the past year to less than US$350 in July, said David Chen, an analyst at research firm IDC Taiwan Ltd. That's narrowed the price difference with a 17-inch CRT monitor, which fell about a quarter in price during the same period to about US$173, Chen said.
People are ready to pay more for a flat-screen's sleek design and lack of radiation emissions, whose impact on the eyesight and health is still disputed. Flat panel sales at King's store accounted for about 40 percent of sales this year, up from 20 percent last year.
The sales volume of CRT monitors in Taiwan tumbled 17 percent in the first quarter, according to the state-run Market Intelligence Center (市場情報中心). During the same period, LCD sales more than doubled, the research center said.
"It's a very slow market right now," said David Chang, vice president of finance at Mag Technology. The monitor maker, which has debt more than three times equity, agreed with creditors to reschedule NT$500 million of bond payments due last week.
Mag sold its Taiwan plant last year, concentrating production at a plant in China's Guangdong province, where it planned to cut costs and tap the world's biggest and increasingly prosperous consumer market amid a PC slump elsewhere in the world.
"The market is growing very fast," Chang said. China's economy grew 7.8 percent in the second quarter as government spending on public works helped counter the effects of flagging exports. By contrast, the US economy grew 0.7 percent, the lowest in eight years.
ADI, which has debt 1.6 times its equity, said it asked to defer payment on US$54 million of overseas convertible bonds after investors demanded full payment in cash.
The first computer-monitor maker to sell its shares on Taiwan's Stock Exchange plans to present a repayment schedule to creditors in September.
"The early CRT makers that didn't diversify to make other products are all facing financial problems as they keep posting losses," said Richard Wu, an analyst at International Securities Co (國際證券). "The trend is LCDs."
Moving into flat screens often isn't an option. While falling prices boosted demand for flat screens, too many manufacturers piled in to the market, driving down profit margins. AU Optronics Corp (
GVC Corp (致福), which now makes telecommunications equipment, closed its monitor business in 1999 after it began making losses.
"GVC focused on its more profitable businesses instead," said Chief Financial Officer James Ho. The company sold its PC-making unit to Lite-On Technology Corp (源興科技) last December. GVC plans to start shipping cell phones to Ericsson AB in the fourth quarter of this year.
Still, the biggest CRT monitor makers remain profitable, and the screens should survive in a smaller niche market for users who want the brighter color of a CRT screen compared with the LCD equivalent.
"Some people such as designers and artists will still use CRTs for their work," Chen said. At the same time, the surviving CRT makers will move production to China to reduce their costs.
Chunghwa Picture Tube Ltd (
"We're still making money with CRTs," said Vice President Tony Chien. Still, Chunghwa plans to move more of its production lines to China and increase capacity of LCD screens in Taiwan as demand for flat screens rises.
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