Chi Mei Optoelectronics (CMO) LCD Fab Utilization Below 60% in November
Chi Mei Optoelectronics (CMO) is the second largest LCD manufacturer in Taiwan and just announced that its November LCD fab utilization rate dropped to below 60%. Normal levels are high 80s. CMO is only taking orders with price quotes that are above its manufacturing cash cost levels. Jau-Yang Ho, President of CMO, indicated that the company will not be suspending any LCD fabs even though utilization rates have dropped considerably. Biing-Seng Wu, Executive VP of CMO, calmed fears of a plant shut down by stating that even if the company had to shut down a LCD fab it is easy to resume operations with normal levels of production and yield within just a week. International exchange rates are not helping either. While Korea’s won depreciated against the US dollar by 60%, the Taiwan dollar dropped just 3% making it very difficult to compete against Samsung and LG Display.
AU Optronics (AUO) and CMO have traditionally competed on price against competitors such as LG Display, Samsung, Sharp and others. With a price disadvantage and without a significant technology advantage, the two largest Taiwan-based LCD manufacturers will have difficulty getting into LCD programs from major brands, who in turn are looking for lower LCD costs in light of rapidly declining demand for both LCD monitors and LCD TVs. Although notebook PC demand has been strong there are indicators that demand is slowing.
Technorati Tags: Chi Mei Optoelectronics, CMO, Display Manufacturer, LCD Manufacturer
[...] The top brass at CMO are also sharing the pain. CMO’s top executives have taken 10% pay cuts since October. Other employees have taken unpaid leave. This will not have a material impact on CMO’s operations since LCD fab utilization rates are well below normal levels at below 60%. [...]