Full Utilization L.J. Chen, president of AU Optronics (AUO) stated that the company’s G8.5 TFT LCD fabrication plant, L8A, will reach full utilization of 40,000 glass substrate input capacity by the end of 2009. In the third quarter the G8.5 fab is expected to reach 30,000 glass substrate input per month. The 2,200 x 2,500mm glass substrate can be cut into six 55-inch, six 52-inch or eight 46-inch LCD panels. So what’s the dumb part?
The Dumb Part Fab utilization is increasing now because… [private] the LCD panels that are being manufactured are going into LCD goods that will be sold in the fourth quarter, a period that has historically shown to be the strongest quarter for LCD goods such as LCD TVs, LCD monitors and notebook PCs. But that’s now. In the fourth quarter, the LCD panels that get manufactured will be going into LCD goods that get sold in the first and second quarters of 2010, typically weak quarters. So what is AUO doing ramping up to full utilization at exactly the wrong time? Well, the only answer I have is because the company’s decision makers are dumb.
Clearance Sale If in fact what L.J. Chen said is the company’s actual goal, there will certainly be a large oversupply of large LCD panels. Brands can negotiate some good deals at the end of the year when all the hoopla over Christmas sales are gone and when clearance sales are just around the corner to blast through leftover inventory. I guess AUO wants the world to know that its manufacturing is strong and growing. And that its LCD panel prices will be slashed at the end of the year–a kind of its own little clearance sale. [/private]