LCD Panel Supply to Tighten Late 2008, AU Optronics Says
The LCD panel shortage will be worse the second half of 2008 than this fall, Hui Hsiung, executive vice president at AU Optronics, told analysts in an earnings call. Tight panel inventory this fall will yield to oversupply first quarter 2008, then stabilize before returning to a shortage, he said. The current quarter’s shortage will be in the “high single- digit” percentage, Hsiung said.
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On the demand side, area growth of LCD glass substrates in 2007 will be 48 percent, while supply expands 46 percent, Hsiung said. In 2008, demand for substrates will rise 28 percent in area, while supply jumps 21 percent, he said.
AU Optronics, which like rivals endured an oversupply in 2006, swung to a $182.4 million profit second quarter from $5.5 million a year ago. Revenue rose to $3.2 billion from $1.84 billion. Improved profit flowed from average selling prices (ASPs) above the norm and rising factory utilization, company officials said. AU factory utilization reached 92 percent second quarter from 81 percent first quarter, short of its target of 95 percent, company officials said.
Overall ASPs across small-, medium- and large-size panels AU makes fell 1.2 percent from the first quarter to $301, company officials said. The ASP for PC monitor panels rose five percent to $110; those for panels 10 inches and up jumped 6.7 percent to $151, company officials said. AU shipped 32.2 million small- and medium-size panels in the quarter as segment revenue rose 27 percent to $251.7 million.
AU will expand 7.5-generation production third quarter, largely for TVs, with production expected to reach 60,000 substrates per month, up from 40,000 in July, Hsiung said. AU will spend about $2.12 billion on 2008 capital projects, down from $2.72 billion to $2.88 billion this year, as it expands 7.5G production and begins by year-end to add a second 7G line, company officials said. Installation of gear for the second 7G line will begin in late 2008, with mass production starting mid-2009 and capacity for 40,000 substrates per month, company officials said.
AU Optronics has no immediate plans to add 8G production and likely will move either to 9G or 10G by 2010 at “the earliest,” Hsiung said. Plants acquired last year in the purchase of Quanta Display have been integrated with AU operations but “there’s still room for improvement,” Hsiung said.