Revenues Increase Chi Mei Optoelectronics (CMO) announced July 2009 TFT LCD related revenues on August 10. Net sales increased 7.4-percent month-over-month and 23.3-percent year-over-year to NT$28.7 billion. The company shipped 7.1 million large-area TFT LCD panels, down 1.4-percent month-over-month but up 46.5-percent year-over-year. Small/medium LCD panel shipments increased 31.7-percent month-over-month and 94.5-percent year-over-year to 16.5 units.
Focus on Larger? Despite a 1.4-percent drop in July from June, CMO experienced an increase of 7.4-percent net sales. What that tells me is one of two things. If CMO sold a similar batch of large-area LCD panels composed of a similar share of different sizes as it did in June then you can assume the average price of LCD panels have increased. The other scenario might be…[private] that CMO is selling more of its larger LCD panels geared for LCD TVs. If this is the case it makes sense since the largest sales in LCD TVs come in the fourth quarter. The number of units sold would actually decrease if CMO focused on larger LCD TV panels assuming that total capacity stayed the same from June to July.
Fear of Oversupply The focus on larger LCD TV panel production to capitalize on sales in the fourth quarter and to increase revenue and perhaps profits is not limited to just CMO; other LCD manufacturers such as LG Display, Samsung, Sharp, Panasonic, AU Optronics (AUO) and others will also be focused on larger LCD panels. And that can be a dangerous thing as it can create an oversupply market situation. Add to that the possibility that the fourth quarter might not be as strong as expected and you can add a stockpile of inventory to clear out on top of the over abundance of large LCD TV panels. If this happens expect LCD TV panels to experience a collapse at the end of the fourth quarter and certainly in the first quarter of 2010.[/private]