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Viewing report
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PDP TV Industry Report, 2006-2007 (Chinese Version)
Research In China, Feb 2007, Pages: 74
According to the report of Korean media, KFTV has began an investigation to LPL and Samsung because they doubt that these two companies have participated in the price monopoly and hope to know whether they have involved in monopolizing LCD panel price and controlling the supply in order to make illegal profits. LPL's press release also verified that KFTC has investigated its Seoul office and meanwhile, JFTC has informed LPL's Tokyo office for a cooperative investigation. US Department of Justice has issued a summons to San Jose, California as well.
Looking back to the panel industry during 2003-2004, these two years are indeed the operational peak of panel industry. Taking AUO as the example, its operating revenue and net profit reached NTD 97.61 billion and NTD 27.96 billion respectively in 2003 and, both figures rose to NTD 164.6 billion and NTD 27.96 billion separately in 2004. As far as CMO is concerned, the operating revenue and net profit reached NTD 62.03 billion and NTD 7.15 billion respectively in 2003 and, both figures rose to NTD 102.5 billion and NTD 17.19 billion separately in 2004.
As for the price during 2003-2004, the average price of 17-inch LCD monitor panel was 295 US dollars in 2004Q1 and climbed to 305 US dollars in April and May and then began to decline; while the price of 32-inch LCD TV panel was as high as 1,100 US dollars, however, the quotation of above-mentioned two kinds of panels decreased to 125 US dollars and 340 US dollars respectively in early Dec 2006.
The price monopoly of panel industry is just like what happened in DRAM industry. The US Department of Justice began to investigate large DRAM manufacturers on price monopoly case, and moreover, Samsung, Hynix, Infineon and Elpida all admitted the fact and accepted the fines of around 730 million US dollars.
According to EU, the highest fine may reach 10% of annual operating revenue if the judge comes into existence while US DOJ may judge the fine based on 2 times of profits of investigated manufacturers, or 2 times of losses of injured manufacturers. So for Samsung SDI and LPL alone, they may be fined as high as 1.1 billion US dollars, among which, Samsung is expected to account for 700 million US dollars while LPL 400 million US dollars. The total fine may be 129 million US dollars more than that of DRAM monopoly case, and 752 million US dollars more than that of Vitamin manufacturers fined by EU in 2001.
However, these LCD panel manufacturers are now facing cash flow shortage for they have invested large amount of capitals into new production lines in order to take the lead in the competitions, especially Samsung and LPL. Now plus the huge fines, it no doubt makes their burden much heavier.
Undoubtedly, Samsung will suffer a largest loss, followed by Sharp, CMO and AUO.
Normally, the anti-monopoly lawsuit is prolonged, and at least it will not end within 1 year. But it can cause a great influence on LCD panel industry. Firstly, LCD panel manufacturers have to remain some cash to deal with the coming huge fine; Secondly, the financing of LCD panel manufacturers will become more difficult for investors believe the shares with frequently wavy are not promising. The amplitudes of LCD panel manufacturers themselves are rather big, plus another uncertain factor of lawsuit, the investors will certainly sell the shares of LCD panel manufacturers. Thirdly, LCD panel manufacturers are facing cash flow shortage, so the further development of new production lines will be delayed and even paused.
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