Chi Mei Optoelectronics accelerates capacity add; AUO, LPL, GLW, PHTN
(Business News, 30 Jun 2008 )
Chi Mei is accelerating its aggressive capacity ramp schedule. CMO’s Gen 6 fab, which has been producing for a few months, will ramp to 80k/ sheets per month by year end 2008. This is 30k sheets per month ahead of our 50k forecast for this fab. The target for the Gen 7.5 fab remains at our previously published 100k (two 50k lines), and the on-going construction of the company’s Gen 8 fab is on schedule for production in 3Q 2009, although we believe it could be completed a bit earlier.
CMO continues to ramp their large panel capacity at an above industry rate, looking to move their share of the TV market above the ~17% that the company commanded in 2007. While positive for CMO, we remain concerned that they are pushing the capacity game quite hard, and will probably push others into more aggressive plans. AUO is still on the fence for Gen 10+ and others such as IPS Alpha have already announced plans for additional capacity in 2009/2010. This is a positive for the equipment suppliers, but a long-term negative for the panel producers in our view.
Weekly pricing moved down in both retail and channel in concert with expectations of relatively weak pricing for June. We are currently more focused on IT pricing, as it seems to be a foregone conclusion that relatively weak demand continues to push LCD TV prices lower. We believe that IT pricing, particularly monitors will give back the small price increase the segment saw in late April/early May as the short term shortage of monitor capacity is filled by LCD TV fabs, using excess capacity for monitor production. We remain negative on AUO and LPL and positive on GLW and PHTN.
