Innolux bets on assembly for revenue

BRANCHING OUT::The company needs the TV assembly business to offset a slump in the flat-panel industry, chairman Jim Hung told reporters at a factory in Tainan

By Lisa Wang  /  Staff reporter, in TAINAN

Wed, Jun 12, 2019 - Page 12

Innolux Corp (群創) expects TV assembly to make up 25 percent of its overall TV business revenue this year, thanks to yield improvement and customer gains, a company executive said yesterday.

That would represent a significant increase from last year’s 8 percent contribution and a 1 percent share the previous year, when the company returned to assembling TVs.

The outlook bodes well for the LCD panelmaker as it branches out to new businesses to cope with high volatility in the flat-panel industry.

The company earlier this year established three wholly owned subsidiaries in Taiwan and China as it prepares to spin off its auto and X-ray machine display businesses.

“We have to assemble TVs to counterbalance” a slump in the flat panel industry, chairman Jim Hung (洪進揚) told reporters at Innolux’s plant in Tainan’s Southern Taiwan Science Park (南部科學工業園), citing the firm’s goal to reshape its business model in three years.

Seeking revenue growth would be high among the company’s priorities and manufacturing TVs would be a major strategy to reach that goal, Hung said.

Innolux said it has grown its customer base in addition to its first client, Sharp Corp, and Vizio Inc to boost revenue growth.

Hon Hai Precision Industry Co (鴻海精密) and Innolux hold a combined 7.24 stake in Vizio, an Irvine, California-based TV vendor.

Innolux’s highly automated production lines and smart manufacturing systems have helped boost yield rate, the company said.

The firm in 2007 set up a two-person task force to develop automated tools and systems, which has since evolved into Innolux’s intelligent integrated automation division group, employing 260 people.

Innolux said it has invested NT$3 billion (US$95.43 million at the current exchange rate) over the past five years into developing automation systems and smart manufacturing solutions, which helped the company reduce staff by 5,000 and cut down manufacturing costs by NT$8.1 billion from 2016 to this year.

Its automated factories, in which robotic arms and machinery operate in the dark, manufacture nearly 90 percent of its notebook computer panels and 80 percent of its mobile phone panels, Innolux said.

The company said it is pitching its smart manufacturing solutions and automation systems to Hon Hai’s subsidiaries, its component suppliers and manufacturers beyond the LCD panel industry.

It has secured orders from up to 10 clients, including two from the nation’s semiconductor industry, Innolux said.

Smart manufacturing solutions and automation equipment could become a major revenue source over time, given that labor and talent shortages have become a bottleneck for Taiwanese manufacturers moving production lines back home to avoid a US-China trade spat, Hung said.

However, the business is still in its infancy, he said.