June 13, 2007 / 3:18 AM / 10 years ago

UPDATE 1-Taiwan's AU eyes return to profit in Q2

(Adds details, background, share price)

By Baker Li

HSINCHU, Taiwan, June 13 (Reuters) - Taiwan's AU Optronics Corp. (2409.TW) (AUO.N), the world's third-largest LCD maker, said on Wednesday it is operating at full capacity, as it expects to return to profitability this quarter amid a sector recovery. "The second quarter will definitely be profitable," President H.B. Chen told reporters after an annual shareholders' meeting.

AU Chairman K.Y. Lee said the company's factories were operating at full capacity, as the sector gains momentum following a slump that saw oversupply and falling prices since the second half of last year.

On Wednesday, Taiwan's Chinese-language Commercial Times also quoted AU as saying it expected to operate at full capacity through the end of the year, as demand outstripped supply.

Chen said at the shareholder meeting that AU's first 7.5 generation liquid crystal display (LCD) fab would produce 80,000 units of motherglass in the third quarter of 2008, double the current 40,000 units.

Its second 7.5 generation fab would also produce around 40,000 units in 2009, said Chen.

AU Optronics Corp. is expected to earn a net profit of T$1.546 billion ($46.8 million) in the second quarter, reversing a T$5.105 billion loss in the first and up sharply from a T$182 million profit in the second quarter last year, according to Reuters Estimates.

The profit is seen rising further to T$8.9 billion in the third quarter and T$13.7 billion in the fourth quarter.

AU's Taipei-listed shares had gained 1.63 percent to T$56.10 in early trade, outperforming the main TAIEX share index's .TWII 0.11 percent rise.

Shares of Taiwan's second largest LCD maker, Chi Mei Optoelectronics 3009.TW, were up 1.02 percent at T$39.75 after Citigroup raised its price target on the company to T$48.

AU supplies about a fifth of the world's LCD output after acquiring smaller local rival Quanta Display last year, counting top PC vendors Dell Inc. DELL.O and Hewlett-Packard Co. (HPQ.N) and TV vendors as major clients.

It allocated T$90-T$95 billion for capital spending this year and would pull back the spending next year, which is positive to long-term supply discipline in the LCD market, dominated by Samsung Electronics Co. Ltd. (005930.KS) and LG.Philips LCD Co. Ltd. (034220.KS) of South Korea.


((Reporting by Baker Li; editing by Doug Young; baker.li@reuters.com; Reuters Messaging: baker.li.reuters.com@reuters.net; +886 2 2508-0815)) Keywords: AU/

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