The nation’s two biggest LCD panel makers, AU Optronics Corp (AUO, 友達) and Innolux Corp (群創), on Wednesday reported that their second-quarter net profits were the strongest quarterly figures in more than seven years, benefiting from the industry’s longest boom cycle amid a supply crunch.
The companies expressed confidence about the third quarter, despite recent price corrections.
The prolonged boom has boosted prices of flat panels and TVs, which only sidelined consumer purchasing and dampened TV sales briefly, the firms said.
Recent price reductions are to serve as a catalyst for robust TV sales during the peak season, which begins this quarter, AUO and Innolux executives said.
“Customers are building inventories for the high season,” AUO chairman and chief executive officer Paul Peng (彭双浪) told an investors’ teleconference. “We believe business is coming back after brief turbulence.”
“The third quarter should be a strong season. TV vendors are stepping up sales promotions to reach whole-year sales targets and taking advantage of recent price adjustments,” Peng said.
Growth drivers are mainly to come from cathode ray tube TV replacement demand in emerging markets, including Asia, Latin America and Russia, AUO said.
AUO said it is not worried about a potential risk of oversupply, with several new Chinese plants to begin mass production later this year.
“Based on our calculations, additional supply from China will only add 3 percent capacity to the market, which is not sufficient to tilt the supply-demand balance,” Peng said.
This year is to be a healthy one for the LCD industry, as global panel demand is expected to outgrow supply by about 2 percent, AUO said.
Meanwhile, Innolux downplayed potential effects from China, where the world’s first 10.5G fab is to begin mass production next year.
“We do not expect oversupply to happen in all segments next year, despite overall supply growth expected to be significant,” Innolux chairman Wang Jyh-chao (王志超) said at a separate teleconference.
“Chinese panel makers might only produce mid to low-end panels using that new, advanced factory due to high technological barriers,” Wang said.
The firms might be immune to the effects, as they focus on making high-end panels for TVs with narrow bezels and rich color performance, they said.
In the quarter ended June 30, AUO’s net profit rose 3.7 percent to NT$9.83 billion (US$324.94 million), compared with NT$9.48 billion in the first quarter, which was a nine-year high.
Shipments of TV and PC panels are expected to be flat, or rise slightly, this quarter from last quarter, AUO said.
Average selling prices are expected to be little changed on a quarterly basis, it said.
TV panel shipments are expected to rise by a low single-digit percentage this quarter, while average selling price is expected to fall by a low single-digit percentage, Innolux said.
Innolux’s net profit last quarter rose to a seven-year high of NT$12.12 billion, up 2.2 percent from NT$11.86 billion in the first quarter.
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