Major TFT-LCD Panel Makers Cut Capital Spending to Counter Weak Demand

LG Display of South Korea, a globally leading thin film transistor-liquid crystal display (TFT-LCD) panel manufacturer, recently announced that it would cut its capital spending by 25% in 2012 and has no plan to build new panel factory, due to the stagnant global panel demand. 

In Taiwan, the top-two players Chimei Innolux Corp. and AU Optronics Corp. (AUO), already cut their capital spending this year, and are not expected to expand their production capacities in the near future. 

In the second quarter, all the world`s top-four panel makers, namely Samsung, LGD, Chimei Innolux and AUO, suffered operating losses, while the panel prices are still lingering at the bottom level, driving all of them to reduce their investment. 

LGD originally planned to launch capital spending of 4 trillion Korean won (about US$3.8 billion) this year to expand the capacity of an 8.5th-generation (8.5G) panel plant and invest in a planned new 8.5G facility in China. At its recent shareholders’ meeting, the Korean company announced to cut about one trillion won in capital spending this year and postpone its 8.5G investment plan in China. LGD also said that it decided to cut its 2012 capital spending by 25% due to weak demand for TV panels. 

In response to LGD`s decision, AUO said that it has not mapped out capital-spending plan for 2012. AUO has reduced its 2011 capital spending from NT$90 billion (US$3.1 billion) to NT$70 billion (US$2.4 billion) and will not increase production capacity this year. 

Chimei Innolux has no plan to add capacity and already postponed its Chinese investment project. The firm has adjusted down its capital spending for this year from NT$100 billion (US$3.5 billion) to NT$50 billion (US$1.7 billion).