Global TFT-LCD Industry to See Demand Outpace Supply in 2010

Taipei, Feb. 3, 2010 (CENS)--L.J. Chen, CEO of AU Optronics Corp. (AUO), the largest thin film transistor-liquid crystal display (TFT-LCD) panel manufacturer in Taiwan, recently said that demand in the 2010 global panel market would exceed supply.

According to Chen, there is a panel supply shortage in the first quarter and major panel suppliers would be "squeezed" by customers due to strong demand.

AUO is scheduled to record capital spending of NT$100 billion (US$3.08 billion at US$1: NT$31.9) this year, up 64% from NT$61 billion (US$1.88 billion) in 2009. The money would be used in the company's second 8.5th-generation (8.5G) panel plant (with planned monthly capacity of 50,000 substrates) and a capacity expansion project at the firm's existing 7.5G facility (from 100,000 to 130,000 substrates).

AUO registered net loss of NT$7.85 billion (US$241.5 million) in the fourth quarter of 2009, lower than institutional investors' forecasts. The panel maker had net profits of NT$1.9 billion (US$58.46 million) in the quarter, but enlisted spending including NT$10 billion (US$307.7 million) paying the anti-trust fine in the United States as well as NT$900 million (US$27.7 million) paying loan interests. For full 2009, AUO registered an after-tax net loss of NT$27.25 billion (US$838.3 million), translating into earnings per share (EPS) of -NT$3.04 (-US$0.09).

Chen pointed out that Microsoft's new operating system (OS) would lead to a strong replacement purchase wave from the second quarter, when Apple will kick off vending its new iPAD tablet PC. Both would bring up the demand for panels and support AUO's sales.

In the second half, the traditional sales peak for the panel industry, Chen said, demand would be quite strong in the third quarter and even stronger in the fourth quarter. He added that the global demand for TFT-LCD panels in terms of area would grow 24% to 25% this year, but the supply increases only 21%. That means, he explained, the 2010 is an over-demand year.

Paul Peng, AUO's senior executive vice president, said the overall demand is quite strong in the first quarter due to the coming Chinese New Year sales peak and healthier downstream parts inventory in conjunction with the recovering economy.