Taiwan's AU, Chi Mei Expect Higher LCD Prices in Q3

TW_0">2409.TW) and Chi Mei (3009.TW), Taiwan's top two LCD panel makers, on Wednesday said they are facing a shortage of glass used for the panels that could lead to higher prices in the third quarter.

In a sign of restocking inventory and improving demand from markets such as China, AU Optronics said it was facing a shortage in the specialty glass needed to manufacture LCD panels.

"We're missing about 20-30 percent of the glass panels we need, and that could lead to an upswing in prices," L.J. Chen, AU's president and chief executive, told reporters on the sidelines of a business event.

Chen also said AU, the world's third-largest LCD maker, had started production at its next-generation LCD panel factory ahead of schedule as demand climbed for its products and expected that up to 10,000 panels could be manufactured there this month.

The plant was originally scheduled to begin production at the end of June.

In May, AU said it expected to return to profitability in the second half of this year, after operating in the red in the fourth quarter of last year and the first three months of this year, due to a pick-up in demand for flat-screen TVs. [ID:nTP238911]

AU's smaller rival Chi Mei said it was facing a similar glass shortage.

"The third quarter is traditionally the peak season for LCD makers, but we may not be able to raise our utilisation rates this time because of a component shortage," Kuo Chen-lung, Chi Mei's vice-president for global sales and product development, told reporters on the sidelines of the business event.

"Demand from China is strong, so coupled with the current glass shortage, prices will climb in the third quarter."

The company had previously said it expected its capacity utilisation rate in the second quarter to be around 80-85 percent.

Companies such as Corning (GLW.N), that supply the specialty glass needed for LCD panels, recently raised forecasts for the current quarter as technology demand recovers on a possible turnaround in the global economy.

Part of the shortage has been attributed to China's recent move to encourage the purchase of electronic products in rural areas, driving up demand for consumer electronics and related components.

On Wednesday, AU share closed up 1.58 percent and Chi Mei shares ended up 0.78 percent, outperforming the benchmark TAIEX share index's 0.75 percent gain.

(US$1=T$32.7)