Capex of Chimei Innolux (CMI) in 2011 is expected to reach NT$100 billion (US$3.4 billion), mainly for expanding capacity at its 6G, 8.5G and touch panel production lines.
Eddie Chen, CFO of CMI noted that 70% of the capex will be used for improving large-size panel production and purchasing equipment, and the monthly capacity of its 6G plant in Tainan will increase to 200,000 substrates at the end of 2011 from the current 180,000 units, while the monthly capacity of its 8.5G plant in Kaohsiung will increase to 54,000 units at the end of the year from 30,000 units.
CMI will also expand its touch sensor production capacity and expects to increase the monthly capacity at the 2.5G Longhua plant in China to 80,000 units at the end of 2011 from the current 75,000 units, mainly for producing 3.5-inch touch sensors. The 4.5G Zhunan plant in Taiwan will expand to 45,000 units per month at the end of the year from 41,000 units, mainly for producing 10.1-inch touch sensor. The monthly capacity of 4.5G Tainan plant will increase to 70,000 units at the end of the year from 20,000 units, also for 10.1-inch touch sensor production.
Regarding CMI's cooperation with Sharp, CMI CEO Hsing C Tuan indicated that with Japan being the pioneer in the TFT LCD industry, it is reasonable for Taiwan to cooperate with Japan-based players, and the relationship between CMI and Sharp includes wide viewing angle and system technologies. Furthermore, with the two companies having different generations of production plants, it is possible for the two companies to purchase panels from each other, Tuan added.
In terms of recent panel industry demand, CMI noted that shipments for IT (monitor and notebook) products are expected to remain flat or increase slightly in the second quarter of 2011, while TV panel shipments are expected to drop slightly in the second quarter as the overall market demand in Europe remains low. Overall shipments and revenues in the second quarter are expected to increase based on the current overall market outlook.
General manager Wang Jyh-chau for the South Branch of CMI added that demand in North America is picking up in the first quarter of 2011, but demand from Europe remains weak. For the China market, sales during the Lunar New Year holidays were not bad, and the demand for the upcoming Labor Day holidays in May is peaking up, and overall demand from China is expected to increase, but not as strong as in 2010. Demand from Japan is expected to start decreasing in the second quarter as the government subsidy program, Eco Point, will end.