Chimei Innolux Continues Suffering Loss in Q2

Taipei, Aug. 16, 2011 (CENS)--Chimei Innolux Corp., the largest maker of thin film transistor-liquid crystal display (TFT-LCD) panels in Taiwan, reported a loss of NT$13 billion (US$448.3 million) in the second quarter, deeper than institutional investors' forecast.

Industry sources said that the four major makers of large-sized TFT-LCD panels, i.e. AU Optronics Corp. (AUO), Chimei Innolux, Chunghwa Picture Tubes, Ltd. (CPT) and HannStar Display Corp., together reported total loss of about NT$120 billion (US$413.8 million) in the past about one year.

Some institutional investors said that the all-size panel prices are expected to fall slightly, implying that makers' losses in the third quarter would not be less than second quarter's.

At its recent half-year online shareholder meeting, Chimei adjusted down its capital spending to NT$50 billion to NT$60 billion (US$1.7 billion to US$2.1 billion) from NT$75 billion to NT$70 billion (US$2.6 billion to US$2.4 billion) lowered previously and NT$100 billion (US$3.4 billion) announced in early this year. Chimei said that this year the company would focus mainly on high-level equipment and R&D projects for touch-panel technology.

AUO, Chimei Innolux's major rival and the No. 2 panel maker in Taiwan, recently also adjusted down its capital spending goal to under NT$70 billion (US$2.4 billion) from NT$90 billion to NT$95 billion (US$3.3 billion to US$3.1 billion).

Chimei Innolux is a merger between three companies, including Chi Mei Optoelectronics Corp. (CMO), Innolux Display Corp., and TPO Displays Corp. (TPO), formed in the second quarter of 2010, and began reporting loss starting the third quarter of last year that has continued for four seasons.

AUO reported an accumulated loss of NT$36 billion (US$1.24 billion) in the past three quarters.

Eddie Chen, Chimei Innolux's chief financial officer, said that his company focused on shipments of core businesses and cut many system assembly works in the second quarter. The company's second-quarter shipments of large-sized panels increased about 10% quarter-on-quarter (QoQ), but its revenue generated from small/medium-sized panels fell 18.4% QoQ due to the falling panel prices. J.C. Wang, president of Chimei Innolux's Southern Taiwan Science Park (STSP) branch, pointed out that his company decided to cut system-assembly business because it takes too many labor forces and that's not his company's core competitiveness.

Wang said that the third quarter is a traditional high season, but the market now seems relatively weaker than it should be. In the second quarter, Chimei Innolux's capacity utilization rate was about 80%, the company said that it would adjust according to market conditions.