Taiwan's top LCD makers may cut production - paper

TAIPEI, July 2 (Reuters) - AU (2409.TW) and Chi Mei, Taiwan's top two LCD makers, are closely watching their inventories and are not ruling out production cuts after recent falls in panel prices, a local newspaper said on Wednesday. The Chinese-language Commercial Times quoted AU Optronics (AUO.N) Vice President Paul Peng as saying that some of AU's clients have high stockpiles and the company would monitor market conditions in the next month, possibly cutting production to adjust inventories.

Chi Mei Optoelectronics Corp (3009.TW) is mulling a similar move but the paper quoted the firm's President Ho Jau-yang as saying that it was normal to scale back output during the industry's slow manufacturing season.

At 0249 GMT, AU shares rose 1 percent and Chi Mei shares gained 2.3 percent, defying a 0.3 percent fall on Taiwan's main TAIEX share index . AU and Chi Mei officials were not immediately available for comment. The paper said AU and Chi Mei reduced panel production in the last downturn in 2006, easing pressure on the supply side.

Worries over lower panel prices and a possible supply gult next year have promoted foreign brokerages such as Merrill Lynch to cut their investment ratings on AU and Chi Mei, which supply liquid crystal displays (LCDs) to top PC and TV vendors. (US$1=T$30.4) (Reporting by Baker Li, Editing by Jonathan Hopfner)