Samsung further cuts LCD output

Samsung Electronics further reduced output of liquid crystal display panels this month as the global economic downturn hurt demand for flat-panel TVs and monitors, company officials said yesterday.

Analysts said that the move was telling, as it was made by the market leader, and further reductions could be made next year as global economies are deteriorating.

"Our (LCD equipment) utilization rate has dropped sharply this month," a spokesperson for the electronics giant told The Korea Herald.

He declined to give the extent of the cut, but said, "It is clear that further adjustment was made in December."

In October, Samsung`s LCD business head Lee Sang-wan told reporters that the company had started to "adjust inventories" by 5 percent and that a cut could be expanded in December when seasonal demand is usually low.

Samsung`s smaller rivals such as Korea`s LG Display, Taiwan`s AU Optronics and Chi Mei Optoelectronics have been also slashing production as the economic downturn has pulled down prices of LCDs.



An LG Display executive told The Korea Herald that the company extended its LCD output cut to around mid-30 percent this month, following a 15 percent reduction in November and a 10 percent cut in October.

The world`s No. 2 LCD manufacturer said early this month that it expects its factories to run at about 80 percent of capacity in the October-December period. Taiwanese companies` operation rates have also tumbled to 50 to 60 percent, according to a recent report by Citi Group.

<**1>

Lee Jeong, an analyst at Hana Daetoo Securities, said it is "natural" for Samsung Electronics to join its smaller rivals in expanding production cuts given that demand is slowing. He said Samsung`s operation rate could be further reduced in the first half of next year as economies are faltering.

"Samsung`s further output cut holds a symbolic meaning as the company is the world`s top maker of LCD screens," he said.

"(LCD makers) are in a survival game," he said.

Ryu Sung-rock, an analyst at NH Securities, also said Samsung`s latest move is a "preemptive response" to weaker demand expected next year.

Meanwhile, the Samsung spokesperson yesterday denied speculation that Samsung, the world`s top maker of memory chips, would cut its NAND flash memory output. Reports that Japan`s Toshiba Corp and its U.S. partner SanDisk Corp would reduce NAND flash memory production by 30 percent have fueled speculation that Samsung may follow suit.

Global chipmakers are grappling with falling demand and tumbling prices as the economic downturn is delaying the recovery of the memory chip industry, which has been in a downturn since early 2007. Prices of the benchmark NAND flash memory chip plunged 71 percent this year.

By Jin Hyun-joo



(hjjin@heraldm.com)