Business

Editor: Eve Guo
11 Dec 2008 07:51:46 GMT

TAIPEI/TOKYO, Dec 11 – Taiwan’s AU Optronics Corp <2409.TW> and Japan’s Sharp Corp <6753.T> will cut production activity, media reports and company statements said, in the latest signs of trouble for LCD makers amid slowing demand for PCs and TVs.

AU Optronics <AUO.N>, the world’s No. 3 LCD maker which supplies to Dell <DELL.O>, Hewlett-Packard <HPQ.N> and some other TV brands, said on Thursday it will delay construction of its advanced LCD plants by at least six months.

The news came after AU Optronics slashed its fourth-quarter forecasts on shipments and panel prices earlier this week as its November sales declined by two-thirds from a year ago.

IDC has recently trimmed its forecast for global LCD TV shipments this year by 4 percent to 95 million units, even though the U.S.-based market research firm expects lower prices to spur fresh demand next year.

A slowing economy has forced most consumers to cut spending on new computers, mobile phones and flat-screen TVs, which has also pushed down prices of some key components such as liquid crystal displays (LCDs) and chips.

AU originally planned to start constructing the plants using advanced 11th-generation technology to make larger panels mainly for flat-screen TVs, in the second half of next year, a company spokeswoman said.

"Construction of the company’s next-generation factories will be delayed for at least half a year," AU said in a brief statement, without further details and only saying the timeframe would be flexible depending on future market conditions.

In August, AU said it planned to invest about T$400 billion ($12 billion) to build four new LCD plants in Taiwan over the next 10 years.

Sharp will close production lines at two plants in western Japan that make LCD panels for mobile phones and personal computers, the Nikkei business daily reported on Thursday, citing company sources.

This would be the first time for Sharp to shut down LCD production lines in operation, the paper said, adding that these lines went online in the early 1990s and currently produce low-definition LCD panels.

Sharp officials were not immediately available for comment.

Some big TV vendors, including Sony Corp <6758.T> and Samsung Electronics Co <005930.KS>, have lowered prices of their TVs since the beginning of the year after panel prices weakened, according to IDC.

IDC said major LCD panel makers, including AU and Chi Mei Optoelectronics Corp <3009.TW>, should continue to cut production or they could face a severe supply glut next year.

In Taipei, AU shares closed up 3.8 percent and Chi Mei shares rose 0.5 percent on Thursday, outpacing the main TAIEX’s <.TWII> 0.1 percent fall. Sharp shares fell 0.5 percent against the Nikkei index’s <.N225> 0.7 percent gain.

(US$1=T$33.5) (Additional reporting by Argin Chang in TAIPEI)