Flat-panel maker Innolux Corp (群創) yesterday reported that its quarterly losses ballooned to NT$6.86 billion (US$228.38 million) last quarter, as new capacity from China and the effects of a US-China trade dispute took a toll on market demand and TV panel prices.
Losses last year totaled NT$17.4 billion, ending seven consecutive profitable years for the Hon Hai Precision Industry Co (鴻海精密) unit, it said.
The company now pins its hope on the Tokyo Olympic Games stimulating demand and easing oversupply later this year, it said.
The panel supply is to decrease after South Korean manufacturers shut down some factories, it added.
To cope with the financial hardship, Innolux plans to slash capital spending by about 20 percent to NT$23 billion this year, from NT$28.8 billion last year.
The company said last quarter’s losses had widened from a NT$3.9 billion in the previous quarter. The company registered a loss of NT$697 million in the fourth quarter of 2018.
Panel prices slumped 5.82 percent year-on-year and 4.18 percent quarter-on-quarter to US$275 per unit last quarter, the company said.
Gross margin dipped to minus-2.1 percent last quarter, from 6.2 percent in the same period last year and 1.9 percent a quarter earlier.
Revenue tumbled 9.22 percent annually to NT$65.58 billion last quarter, with the TV panel contribution falling from 43 percent to 35 percent of total revenue.
The Miaoli-based company expects rough days ahead as an outbreak of COVID-19 in China reduced the number of working days for its factories, which it said would cut into the company’s panel shipments this quarter.
Innolux expects shipments of TV and PC panels to dip by a high-double-digit percentage this quarter from last quarter’s shipments, a more drastic contraction than a 5 percent sequential decline forecast by local rival AU Optronics Corp (AUO, 友達).
The company said that average selling prices of its products would rise by a low-single-digit percentage quarter-on-quarter, matching AUO’s forecast.
The company’s shipments of smaller panels used in mobile phones and laptops would also fall by a high-double-digit percentage from last quarter, but product prices are expected to rise by a mid-single-digit percentage sequentially, it said.
Innolux had a weak start to the first quarter by reporting a 25 percent decline in revenue for last month to NT$16.58 billion, compared with NT$22.07 billion in December last year.
On an annual basis, revenue dropped 21.8 percent from NT$21.21 billion.
Shipments of TV and PC panels plunged by 21.3 percent last month from a month earlier, the company said in a separate statement.
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