Report: TFT-LCD firms slashing equipment spending

November 1, 2006 – Manufacturers of thin-film-transistor liquid-crystal-displays (TFT-LCD) are expected to reduce their equipment investments by roughly 30% over the next three years, to help maintain manufacturing pace, ease overcapacity, and keep prices from falling, according to market research firm DisplaySearch.

Total global panel-equipment investment this year will drop to about $10.8 billion in 2007 from $11.79 billion this year, followed by a 17% slide to $8.94 billion in 2008 and another 9% decline to $8.14 billion in 2009, according to David Hsieh, VP of DisplaySearch Greater China, quoted by the Taiwan Economic News.

Hsieh noted a widening gap between the first- and second-tier TFT-LCD panel makers — while top firms are slowing down their investment pace, smaller players can’t make further investments due to insufficient funds, noted the paper.

LG.Philips LCD Co. Ltd., for example, is planning a wave of cutbacks for its FPD investments. The firm plans to add only one-third of expected capitalization funds next year (one trillion won, vs. three trillion won), has halted construction of a planned 8G panel plant, delayed the production ramp of a new 5.5G facility into 1Q08, and cut down monthly capacity at its new 7.5G facility by 18% to 90,000 substrates/month.

AU Optronics, Taiwan’s top panel manufacturer, also plans to reduce capital expansion by 30%-40% next year. The firm has yet to map out its plans for a new 8G plant, and its new 7.5G facility is expected to reach only 10,000 substrates/month by year’s end, with volume output delayed to the off-season of 1H07, noted the paper. Chi Mei Optoelectronics Corp. also has yet to schedule equipment installation for its new 8G facility in the Southern Taiwan Science Park, and expected to delay mass production at its new 7.5G plant to 2H07.

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