LCD panel maker AU Optronics Corp (AUO, 友達光電) shares yesterday tumbled 6.67 percent after the company posted its first operating loss in 14 quarters for last quarter, which it attributed to an overcapacity-driven slump.
The shares sank to NT$11.90 compared with the TAIEX’s 0.01 percent gain.
The Hsinchu-based company blamed rapid capacity expansion by its Chinese peers for an increase in panel supply in the second half of last year, which tipped panel supply-and-demand balance and ended the industry’s six-year upturn.
The supply glut sent TV panel prices down by between 20 percent and 30 percent year-on-year in just one quarter, AUO chairman Paul Peng (彭双浪) told an investors’ conference on Tuesday.
The price slump has put “almost all panel companies under heavy pressure” to eke out profits, Peng said.
“AUO saw a significant decline in [gross] margin in the fourth quarter,” he said.
With more large-scale panel fabs in China to enter mass production over the next few years, “oversupply will become the new norm for a long time,” Peng said.
This year is expected to be a “challenging year, with oversupply remaining in place,” Peng said, given growing macroeconomic uncertainty stemming from trade conflicts between the US and its major trading partners, including the EU and China.
To cope with industry headwinds, AUO is to focus on expanding high-margin product portfolios, such as 75-inch 8K ultra-high-resolution TV panels and 65-inch high-end monitors for gaming PCs.
AUO also plans to lower factory utilization in accordance with market fluctuations. The company operated factories at about 95 percent last quarter.
The panel maker expects PC and TV panel shipments to shrink by a high-single-digit percentage this quarter from last quarter, while it expects average selling prices to drop by a low to mid-single-digit percentage in US dollar terms.
In the fourth quarter of last year, AUO swung to an operating loss of NT$1.45 billion (US$47.11 million), compared with an operating profit of NT$3.07 billion in the third quarter and NT$5.7 billion the previous year.
Gross margin dipped to 5.3 percent in the fourth quarter, compared with 13.9 percent a year earlier.
However, AUO still eked out net profit of NT$281 million, thanks to non-operating gains.
That helped the company report its sixth straight year of profit, with the figure last year totaling NT$10.16 billion, a decline of 68.5 percent from NT$32.36 billion in 2017.
Earnings per share dropped to NT$1.06, compared with NT$3.36 in 2017.
The company plans to spend NT$40 billion on new equipment this year, up from NT$38.8 billion last year.
BUSINESS UPDATE: The iPhone assembler said operations outlook is expected to show quarter-on-quarter and year-on-year growth for the second quarter Hon Hai Precision Industry Co (鴻海精密) yesterday reported strong growth in sales last month, potentially raising expectations for iPhone sales while artificial intelligence (AI)-related business booms. The company, which assembles the majority of Apple Inc’s smartphones, reported a 19.03 percent rise in monthly sales to NT$510.9 billion (US$15.78 billion), from NT$429.22 billion in the same period last year. On a monthly basis, sales rose 14.16 percent, it said. The company in a statement said that last month’s revenue was a record-breaking April performance. Hon Hai, known also as Foxconn Technology Group (富士康科技集團), assembles most iPhones, but the company is diversifying its business to
Apple Inc has been developing a homegrown chip to run artificial intelligence (AI) tools in data centers, although it is unclear if the semiconductor would ever be deployed, the Wall Street Journal reported on Monday. The effort would build on Apple’s previous efforts to make in-house chips, which run in its iPhones, Macs and other devices, according to the Journal, which cited unidentified people familiar with the matter. The server project is code-named ACDC (Apple Chips in Data Center) within the company, aiming to utilize Apple’s expertise in chip design for the company’s server infrastructure, the newspaper said. While this initiative has been
GlobalWafers Co (環球晶圓), the world’s No. 3 silicon wafer supplier, yesterday said that revenue would rise moderately in the second half of this year, driven primarily by robust demand for advanced wafers used in high-bandwidth memory (HBM) chips, a key component of artificial intelligence (AI) technology. “The first quarter is the lowest point of this cycle. The second half will be better than the first for the whole semiconductor industry and for GlobalWafers,” chairwoman Doris Hsu (徐秀蘭) said during an online investors’ conference. “HBM would definitely be the key growth driver in the second half,” Hsu said. “That is our big hope
The consumer price index (CPI) last month eased to 1.95 percent, below the central bank’s 2 percent target, as food and entertainment cost increases decelerated, helped by stable egg prices, the Directorate-General of Budget, Accounting and Statistics (DGBAS) said yesterday. The slowdown bucked predictions by policymakers and academics that inflationary pressures would build up following double-digit electricity rate hikes on April 1. “The latest CPI data came after the cost of eating out and rent grew moderately amid mixed international raw material prices,” DGBAS official Tsao Chih-hung (曹志弘) told a news conference in Taipei. The central bank in March raised interest rates by