Chunghwa Picture Tubes (CPT), HannStar Display (HSD), Quanta Display (QDI)

CPT will issue Euro Convertible Bonds (ECBs) worth US$200 million in the middle of this year to fund its G6 fab capacity expansion. In mid-2006, CPT's G6 has a total input capacity of 50,000 glass substrates and is expected to have a capacity of 90,000 glass substrate input per month by 1H'07. G6 fabs are currently optimized for 32" and 37" LCD TV panels. Of course you can load other sizes like a 19" LCD monitor or LCD TV panels that are smaler such as 26", but to maintain a good share of the LCD TV market, you are forced to focus on 32", the most popular size for LCD TVs today.

HannStar (HSD) will issue special shares, private shares and bonds to raise about NT$15 billion (US$470 million) to 1) fund the increase of color filter (CF) production to increase vertical integration and decrease costs associated with CFs, and 2) purchase equipment to manufacture small-medium panels. CFs comprise a large portion of the material costs in LCDs and top tier LCD makers have already vertically integrated CF production to reduce cost. So, in-house CF production is a smart move for HSD. On the other hand, entering the small-medium panel business is obviously good or bad. Small-medium ASPs have been going down a spiral and more and more LCD manufacturers are entering the space as older G1-G3 lines become less busy due to larger NBPC, LCD monitor and LCD TV manufacturing being shifted to G4 and larger fabs. Unless HSD has something special to offer in the area of small-medium LCD panels, I would rate this investment as not that great.

Quanta Display (QDI) is pursuing a bank loan worth about NT$20 billion (~US$628 million) to expand its G6 fab to 60,000 glass substrate input per month by the end of 2006. In 2007, QDI is planning to double that capacity to 120,000 glass substrate input per month. Source: Digitimes

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