Market Trend

Between July 20th and August 1st, the MCI index slipped 72.2 points from 5980.3 to 5908.1. The index reflected an optimistic outlook on the TFT LCD industry as evidenced by its mild fluctuations ending in a moderate slip. Moreover, stimulated by the coming traditional hot season for consumer electronics, and the implementation of Home Appliance Replacement Program in early August, panel demand growth is expected to continue in 2H09. That said, panel prices have been soaring since 2Q09, limiting the extent for further increase, and the issue of glass shortage has gradually eased, even though there is advance stock-up from downstream brand vendors, short supply is quite unlikely. In light of the aforementioned factors, panel price increase is expected soften in August .

2Q09 Investor Conference results are released: Taiwan’s manufacturers AUO, CMO and HSD have substantially reduced their losses; their profit margins shifted from -39.9%, -46.7% and -78% to -5.4%, -10.8% and -19%, and EBITDA were +21.5%, +14.2% and +1% respectively. These manufacturers are expected to slip back into the black in 3Q09. In addition, current downstream inventory levels have returned to a healthy status, therefore, as shipment and revenue gradually stabilize, the equilibrium of supply and demand will be restored in the later half of the year.