LCD-Price Declines Spur Cuts In Capital-Spending Budgets By YUN-HEE KIM Wall Street Journal
August 8, 2006; Page B4 http://online.wsj.com/article/SB115499718389429354.html?mod=technology_main_whats_news HONG KONG -- Liquid-crystal-display makers, battling steep price declines, have cut production to stay profitable, but concerns about accumulating losses and uncertain market demand are leading some manufacturers to also reduce their capital spending. Analysts say the actions will help speed up an industry recovery by firming up prices. Prices of LCDs widely used in computer monitors and television sets have been falling sharply this year as manufacturers boosted capacity, anticipating strong demand for flat-screen TV sets ahead of the World Cup football tournament held this summer. Demand failed to meet companies' expectations, leaving many LCD makers in Taiwan and Korea with high inventories. LG.Philips LCD Co., AU Optronics Corp. and Hannstar Display Corp. in recent months have reduced production to minimize losses. After reporting its lowest quarterly performance in five quarters, AU Optronics said last month that it will also cut its capital-expenditure budget for 2007 by 30% to 40%. That announcement came after Korea's LG.Philips LCD said it will cut this year's capital spending 25% and will delay further investment in existing manufacturing facilities. LG.Philips, majority owned by LG Electronics Inc. of Korea and Philips Electronics NV of the Netherlands, also said its next factory will be based on an older-generation technology that costs less. The reductions in capital expenditures "are an attempt by panel vendors to restore supply-and-demand balance," said Anthony Carbone, an analyst at RCM in San Francisco. He said the cuts "will likely result in panel price stability over the next year." Mr. Carbone said industry fundamentals are already improving, because of seasonally stronger demand for computer-monitor and TV-set panels. According to the Taiwan market-research firm WitsView Technology Corp., the average price of a 17-inch computer-monitor panel inched up 6% to $110 this month from late July, while the price of a 32-inch LCD TV-set panel fell 2.7% to $365. Hiro Ikeda, an analyst at Fidelity International in Tokyo, said the capital-spending reduction by companies will mean that LCD-panel prices, at least for computer monitors and small-to-midsize TV sets, "might not drop as fast as expected." While the investment cuts by manufacturers may prove a positive development, some analysts said panel vendors will have to continue to keep pace on expanding capacity or face the threat of losing market share to rivals. Samsung Electronics Co. said it will boost its spending this year by investing jointly with Sony Corp. in a factory using the newest technology, known as eighth generation. Sharp Corp. said last week that it will start production at its eighth-generation plant this month, two months ahead of schedule. ================================ George Antunes, Political Science Dept University of Houston; Houston, TX 77204 Voice: 713-743-3923 Fax: 713-743-3927 antunes at uh dot edu Reply with a "Thank you" if you liked this post. _____________________________ MEDIANEWS mailing list [email protected] To unsubscribe send an email to: [EMAIL PROTECTED]
