LCD panel maker Innolux Corp (群創) yesterday said that it has moved some production back to Taiwan to help US customers circumvent US tariffs on Chinese imports.
The Miaoli-based company said that it has built a new television assembly line in Tainan that would enhance its manufacturing ability and improve flexibility for customers outside of China.
The new production line can churn out 60,000 TVs a month, Innolux said, adding that it would expand capacity to meet customer demand.
“As Innolux looks to expand its TV assembly business and make it a new revenue driver, the company faces challenges as trade barriers increase,” former Innolux chairman Wang Jyh-chao (王志超) told a media briefing.
Wang was yesterday elected as a board director.
“Innolux has to build a second TV manufacturing base outside of China to cope with the current trade environment,” Wang said.
However, China remains a major manufacturing base for the company, given its massive domestic market and relatively lower manufacturing costs, he said.
Innolux would continue assembling TV sets for its Chinese clients at Foshan, Guangdong Province, and assembling LCD modules in Ningbo, Nanjing and Shanghai.
The company makes LCD panels at 14 plants in Taiwan.
Innolux relaunched its TV assembling business two years ago, aiming to create a new revenue source and help digest its panel output.
The company said it expects to see TV shipments increase to as much as 6 million units this year, compared with 1.8 million units last year.
Wang said he did not expect the US-China trade dispute to seriously damage end-market demand for mobile phones, PCs or TVs.
“I do not expect the effect to be bigger than the global financial crisis in 2008,” he said.
Innolux expects a significant reduction in handset display orders from Huawei Technologies Co (華為) as US’ sanctions have reduced Huawei’s mobile phone sales overseas, Innolux vice president Jeffrey Yang (楊弘文) said.
However, strong demand for smartphones, tablets and notebook computers from other clients could fill the vacuum left by Huawei, Yang said.
“We started feeling pressure to satisfy customers’ demands from May,” he said.
At yesterday’s meeting, shareholders approved a plan to distribute a cash dividend of NT$0.06 per common share, representing a payout ratio of 27.27 percent. The company saw earnings per share dipped to NT$0.22 last year.
Some shareholders were not satisfied with the cash dividend, or that the company had spent NT$34 billion (US$1.09 billion) on a new plant in Kaohsiung.
Others demanded that Innolux launch a share buyback program to safeguard their interests, as the company’s stock price had recently hovered at about NT$7, much lower than its net value of NT$25.46.
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