Innolux Corp (群創光電) yesterday posted NT$1.34 billion (US$44.16 billion) in quarterly losses for the fourth quarter last year as gross margin fell on a faster-than-expected price decline for TV panels and lower factory utilization, snapping a run of three profitable quarters.
The quarterly loss reversed net profit of NT$685 million made in the third quarter of last year.
The nation’s biggest flat-panel maker made a net profit of NT$5.1 billion for all of last year, compared with a loss of NT$29.9 billion in 2012. It was the first profitable year for the Miaoli-based firm since 2008.
Innolux expects shipments of PC and TV panels to shrink this quarter by a high-single digit percentage to a low-teens percentage, due to slack seasonal demand, company president Wang Jyh-chau (王志超) told investors during a teleconference.
However, the average selling price for PC and TV panels will be flat, as the company will ship more larger and higher-margin panels, he said.
Due to seasonal factors, shipments of small and-medium-sized panels used in mobile phones and tablets will plunge about 30 percent sequentially, from 104 million units in the final quarter of last year, Wang said.
“The first quarter is a seasonal weak period for the tablet market. Demand for handsets also looks fragile,” Wang said.
However, the average selling price will jump by about 20 percent quarter-on-quarter as the firm plans to ship more high-priced smartphone panels, he said.
Looking at the LCD industry as a whole, “the demand-and-supply situation will be healthier this year than last year,” he said.
He dismissed fears that a sudden spike in supply from China would cause severe oversupply.
“There will be limited new capacity coming out from China this year. China will only add about 5 percent or 6 percent to the overall industry’s production,” Wang said.
Demand for LCD panels in terms of area will outpace the growth in supply because of rapidly growing demand for larger-screen TVs, Wang said.
TV shipments are also expected to see a growth of 4 percent annually for this year at the most, he said, adding that Chinese TV brands seem to be on track to reach their aggressive shipment targets this year after TV sales during last month’s holidays exceeded their expectations.
Innolux is the largest TV panel supplier to China’s major TV makers.
Panel prices may start rebounding in the third quarter if demand continues outstripping supply, Wang said.
“We already feel constraint in supplying some specific panels for laptops and smartphones, even in this slow first quarter,” he said.
Gross margin contracted to 5.1 percent last quarter from 10.2 percent in the previous quarter, according to the company’s financial statement.
Innolux said a 6 percent decline in equipment loading rate last quarter is one of the major factors behind the reduction.
The average selling price fell 4.7 percent to about US$487 per square meter last quarter from the third quarter’s US$511, the statement showed.
Innolux said it plans to raise NT$20 billion by the end of this year to improve its financial structure and finance capital spending.
It has budgeted less than NT$20 billion for upgrading and developing new technologies, compared with NT$18.4 billion last year.