CMO now world's most profitable TFT-LCD panel maker

This article was published by the Taiwan Headlines on April 27, 2006. It reports that Chi Mei Optoelectronics Corp., Taiwan's No.2 maker of TFT-LCD panels, posted excellent profit performance for the first quarter of 2006. The company's profits even outstripped those of AU Optronics Corp., Taiwan's No.1 panel maker.

Specifically, Chi Mei registered 21 percent of profit margin, 15 percent of net margin, and 31 percent of EBITDA (earnings before interest, taxes, depreciation and amortization), in the first quarter of 2006. All of these ratios outstripped those of AU Optronics.

Chi Mei attributed its strong profitability to the increased shipment of higher-margin OA (office automation) panel products - especially the 19-inch monitor panels, which accounted for 16 percent of the company's total shipment in the first quarter of 2006, up from 10 percent of the previous year. From March 2006, Chi Mei's monthly shipment volume of 19-inch monitor panels exceeded 300,000 units and the profit of each panel stands at over US$10.

According to Chi Mei, good product designs are also a key factor for keeping cost down. Currently, a prism sheet for a 32-inch TV panel is priced at about US$25, and Chi Mei has been trying to adopt less prism sheets by increasing the adoption volume of two to four cold cathode fluorescent lamps (CCFL) in a panel module. With this product design, the company can cut the cost by US$10 for a panel module and further upgrade its cost competitiveness and profitability.

Chi Mei now concentrates on the over-40-inch TV panel market. It plans to double the monthly capacity of its scheduled 7.5G panel plant to 100,000 substrates from 50,000 units.

According to Chi Mei, the size of a 7.5G substrate is three times that of a 5G counterpart. However, if glass prices are taken into consideration, the unit cost of 5G production lines is likely to be lower than that of 7.5G lines within the next two years. Therefore, Chi Mei will utilize its 5G lines to produce over-40-inch TV panels before the first 7.5G line begins mass production and reaches higher defect-free ratio.