AUO May Reduce LCD Production

Reducing LCD production on massive fabs is a complex calculation that requires a thorough investigation into the revenue generated from running the fabs at maximum capacity or the loss minimization from reducing capacity resulting in loss sales. The LCD market is at a point where prices need to fall further. This further decline in prices will jumpstart demand and enable inventories to be cleared out. Keeping prices artificially high by reducing panel supply will not bring about inventory reduction. The main thing the LCD manufacturer must be concerned about right now is to reduce cost at a faster pace than price erosion. Usually, accelerated price erosion simply means the price was too expensive in the first place, which usually happens when the panels get really large or is a new form factor.

Hsiung Hui, VP of AUO, claimed that a reduction of panel supply will help to stabilize prices in light of building inventory. Eddie Chen, company spokesman for CMO, also reiterated that reduction of fab utilization might be initiated if demand for panels continues to be weak.

Source: Taipei Times

Additional information: China Post

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