Thu, Nov 06, 2003 page10

• As supplies tighten, global brands reserve production

  • By Bill Heaney / STAFF REPORTER
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  As demand for the liquid-crystal panels used in computer displays, notebook computers and flat-screen televisions increases, big-name global brands are putting pressure on local manufacturers to reserve production space for them at Taiwan's humming panel plants, analysts said yesterday.

  The analysts were responding to a Chinese-language newspaper report yesterday that Dell Inc was pushing for more thin-film transistor liquid-crystal display (TFT-LCD) panels from Taiwan's third-largest supplier of the panels, Chunghwa Picture Tubes Ltd (中華映管), a unit of Tatung Co (大同).

  "Chunghwa Picture Tubes' full [notebook panel] capacity cannot supply Dell's total demands," said Simon Tu (杜立生), an analyst at SinoPac Securities Corp (建華證券). "I think the company may reduce some of its 15 or 17-inch monitor capacity and transfer it to notebook usage."

  The report said Chunghwa Picture could not 100-percent guarantee that it could supply the 4 million TFT-LCD panels Dell expects it will need from the company next year.

  Another analyst said the report was nothing new, as large companies exercise their buying power to secure more production when the supply of key components is tight.

  "We have been hearing for several months that Dell wants to block production at Chunghwa Picture to make sure it has enough panels," said Martha Chen (陳紅), an LCD panel industry analyst with Primasia Securities Co in Taipei. "But my understanding is that Chunghwa is negotiating this on a monthly rather than the usual quarterly basis as they don't want to let Dell block all of their production."

  Chunghwa Picture spokesman Liu Chih-chun (劉治軍) was not available for comment yesterday afternoon. But the company's chief financial officer James Wu (吳俊毅) denied the report, Bloomberg reported yesterday.

  "We didn't say which companies are trying to guarantee supplies," Bloomberg quoted Wu as saying. "At this point, we're just focusing on long-term contracts."

  Chunghwa Picture, which reported net income of NT$14.4 million for the three months ended Sept. 30, says that it can produce 10 million panels for use in notebook computers and flat-screen computer monitors each year.

  Demand for notebook computers in the third quarter this year outstripped flat-screen television and computer monitors, according to reports published by various research firms recently.

  "Falling system prices, performance improvements and wireless awareness continue to bring notebooks to the attention of buyers, particularly consumers," Charles Smulders, a vice president at the US-based Gartner Inc, said last month. International Data Corp reported at the same time that notebook sales in the three months to the end of September in Europe, the Middle East and Africa surged 51 percent on the same period last year.

  The flat-panel industry is prone to cycles of oversupply and shortage as mass-production centers in Taiwan and South Korea compete fiercely for customers.

  "The TFT LCD market remains cyclical and recent results and forecasts show we are very much in the middle of an upswing, with most large-area segments [measuring more than 10 inches diagonally] enjoying strong results," Ross Young, president of industry researcher DisplaySearch, wrote in a report in September. Large-area unit shipments are expected to rise 42 percent this year to 97.2 million units, with revenues up 32 percent to US$23 billion, the report said.
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