Wed, Apr 29, 2009 page12

• Chi Mei says quarterly losses have slowed

  • By Lisa Wang / STAFF REPORTER
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  Chi Mei Optoelectronics Corp (奇美電子), Taiwan’s second-largest flat panel supplier, yesterday said quarterly losses had slowed significantly as the nascent recovery partly offset price declines. It said it expected the revival to gather momentum in the second and third quarters, driven largely by increasing demand from the television sector.

  In the first quarter, Chi Mei’s losses narrowed to NT$19.57 billion (US$579 million), compared with losses of NT$31.13 billion in the fourth quarter of last year, a record high quarterly loss for the company as the economic recession took its toll on demand for almost all electronic gadgets, a company statement said.

  The Tainan-based panel maker earned NT$15.29 billion in the first quarter of last year after the average selling price for TV and PC panels plunged some 47 percent year-on-year to average US$94 per unit as demand dwindled, the statement showed.

  But, Chi Mei said it had witnessed a recovery recently as price and demand started to bounce back from late in the first quarter, it said.

  “We have been receiving a lot of orders recently. Demand has exceeded what we can supply,” company president Wang Jyh-chau (王志超) told investors.

  The company said orders received would occupy most of its equipment through June.

  “Customer demand looks very strong and the increase [in orders] is across-the-board with TV demand outpacing other sectors,” Wang said.

  SHIPMENTS

  The recovery may help the company’s PC and TV panel shipments grow by 25 percent to 30 percent this quarter, from the 13.26 million units shipped in the first quarter, Chi Mei said. Reflecting on equipment usage, loading rate may rise to between 80 percent and 85 percent in the current quarter from between 55 percent and 60 percent in the last quarter, it said.

  Prices may bounce back by 5 percent to 15 percent quarter-on-quarter for PC panels and 5 percent to 10 percent for panels used in TVs with screens smaller than 40 inches, Chi Mei said.

  “We are also optimistic about the third quarter, which should be a better period than the second quarter for the LCD panel industry as a whole,” Wang said. “TV recovery especially in China and North American may outpace other sectors.”

  Jeff Pu (蒲得宇), a liquid-crystal-display (LCD) panel industry analyst with Yuanta Securities (元大證券), however, said Wang’s optimism about the industry could send a negative message about Chi Mei’s operations.

  “Chi Mei’s second-quarter forecast is weaker than that made by rival AU Optronics Corp (友達光電), which indicates that Chi Mei may not benefit from the recovery as much as its rival does,” Pu said.

  UTILIZATION

  AU Optronics forecast that TV and PC shipments would expand by 50 percent quarter-on-quarter and equipment utilization may approach 100 percent. Pu retained a “sell” rating on Chi Mei, while upgrading AU Optronics’ rating to “buy” from “hold” last week.

  In restructuring efforts launched in recent months to improve profitability, Chi Mei said it would not carefully control capital spending and would not join competitors in a capacity expansion race.

  “We are not in a hurry to resume the construction of a 8.5-G plant,” Wang said.

  “The move could put Chi Mei at a disadvantage in seizing business opportunities after demand for TVs with screens bigger than 40 inches grows next year,” Pu said.

  A 8.5-G plant is considered an optimal factory to produce TV screens bigger than 50 inches in terms of cost efficiency, but would cost panel makers more than NT$100 billion to build.

  Chi Mei yesterday raised its capital spending for this year to NT$35 billion from the original NT$30 billion. Last year, it spent NT$104.5 billion on new equipment.
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