Innolux Corp (群創), the world’s No. 3 LCD panel maker, yesterday said deteriorating demand would reduce its shipments of TV and PC panels by a high-single digit percentage this quarter.
The average selling prices by unit of the company’s products are also set to drop by a high single-digit percentage this quarter, the Miaoli-based company said.
The company’s downbeat outlook for this quarter came after it released results for last quarter which showed net profit declined 35.6 percent to NT$3.48 billion (US$105.9 million) from the second quarter, the smallest quarterly level in five quarters, because of weaker-than-expected demand.
On an annual basis, the figure represented a decline of 53 percent.
The average selling price dropped 6.47 percent to US$390 per square meter last quarter, while gross margin fell to 12.1 percent last quarter from 16.6 percent in the second quarter.
The company’s earnings before interest, tax, depreciation, and amortization (EBITDA) margin also contracted to 20.1 percent from 24.7 percent, according to the company’s financial statement.
“Price erosion last quarter was much deeper than we have expected as staggering macro-economies weighed on consumer demand,” Innolux president Wang Jyh-chau (王志超) told an investors’ conference. “Most customers were unwilling to cut their shipments last quarter, but now we are seeing demand trend downward.”
“We also see high inventories for certain TV panels mostly produced from 8.5-generation factories,” Wang said. “The market is filled with 32-inch and 55-inch [TV panels].”
As demand takes a nosedive, Wang said the company is now forecasting that worldwide LCD TV shipments will drop 1 percent annually this year, which is far weaker than his previous prediction that global LCD TV shipments would grow by 3 percent to 5 percent this year from last year.
Global shipments of flat panels for notebook computers and monitors would also decline by as much as 9 percent and 7 percent respectively, he said.
Innolux also plans to put off installing equipment at its new factories, Wang said, adding that the company expects to spend about NT$25 billion to NT$30 billion on the equipment, rather than the NT$35 billion estimated earlier this year.
Innolux is building a sixth-generation plant in Kaohsiung and an 8.5G plant in Miaoli. The 6G factory is scheduled to commence mass production at the end of the first quarter of next year as planned, Wang said.
IHS Display Search yesterday said that a decline in TV panel prices will aggravate this year due to intensifying competition from China and oversupply.
According to a report released yesterday, the market searcher expects mainstream 32-inch TV panels to suffer the brunt and expects prices for those panels to plunge 26 percent annually to well below their cost levels. Prices for 42-inch and 43-inch TV panels are expected to tumble 23 percent year-on-year.
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