CMI chairman apologizes over low performance

The China Post news staff

The chairman of Taiwan’s biggest LCD display panel maker Chimei Innolux (CMI) apologized to shareholders yesterday over the company’s poor performance last year, during which it recorded NT$64.4 billion in losses. The chairman, Hsing Chien Tuan, blamed the falling prices and weak demand as he tried to placate angry investors during the company’s annual shareholders meeting. The shareholders bombarded CMI executives with questions concerning its plans for turning operations back to profitability. The meeting lasted a few hours, much longer than its original schedule as the shareholders kept asking questions. Tuan said since Chi Mei Optoelectronic (CMO) and Innolux Display merged to form CMI in 2009, the LCD display market has seen a quick freeze in demand and fast drop in prices because of worsening of the world economy. He said CMI’s major competitors from Korea, Samsung Electronics and LG Display, also saw losses for their LCD panel businesses last year. Tuan did not mention CMI’s main rival in Taiwan, AU Optronics (AUO), which also suffered huge losses in 2011. He said the industry has also been plagued by oversupply. Currently, only LCD makers in China are still expanding their production capacity. Despite the oversupply, the needs of some specific market segments are yet to be satisfied, and CMI will strive to meet demand from these segments by offering differentiated products, the chairman said. He said the company hopes to increase its share of the laptop display panel market to more than 20 percent this year.

For CMI’s finances, he revealed that the company has already completed negotiations with its creditor banks, and will maintain a slow expansion of production capacity in the future. Asked to explain the equipment depreciation of as much as NT$90 billion a year, Tuan said the utilization rate of the equipment is key to offset the depreciation costs. CMI had an over-90 percent utilization rate in the second quarter, and expects to maintain the same level in the third quarter, he added. Before the merger, Innolux Display was under Hon Hai Precision Industry, while CMO was a member of the Chi Mei Group.

Chi Mei and Hon Hai have similar stakes in CMI. But Hon Hai, founded by one of Taiwan’s richest men, Terry Gou, is now in firm control of the panel firm’s management after Chi Mei earlier this year agreed to depart from its board of directors. The shareholders meeting approved CMI’s financial report for 2011 and elected independent directors to the board. CMI incurred a loss of NT$8.86 for 2011 operations.