Flat-panel display maker Innolux Corp (群創) yesterday said that it has landed new orders from South Korean government agencies to supply a wide range of displays as the nation seeks to reduce reliance on Japanese imports amid a trade dispute.
The orders are part of Seoul’s latest efforts to diversify component and material suppliers to manage supply chain risks after Tokyo tightened exports of key materials to South Korea, the Miaoli County-based company said.
That might shed some light on Innolux’s operations, as most panel display suppliers have been suffering losses after oversupply and faltering demand caused panel prices to plummet and dimmed industry outlook.
Photo: CNA
“South Korean firms are reluctant to buy displays from Japan. We have felt such changes,” Innolux president James Yang (楊柱祥) told a media briefing at the annual Touch Taiwan trade show at the Taipei Nangang Exhibition Center.
“It is even more sensitive for government agencies and military departments in dealing with government procurements... Customers told us they prefer to buy displays from Taiwan,” he said.
Displays used in industrial devices were the top beneficiary, he added.
Local rival AU Optronics Corp (AUO, 友達光電) yesterday said that it had not received any orders transferred from South Korea or Japan.
The company remains focused on a US-China trade spat, as slowing global economic growth due to the dispute would continue weighing on consumption, AUO chairman Paul Peng (彭双浪) told reporters.
“Consumer demand is weakening due to the tariffs, which have negatively affected not only the display industry, but also the whole electronics supply chain. It will pose a bigger problem for consumer electronics segment this year,” Peng said.
To cope with the industry downturn, AUO is adjusting its capacity arrangement to match changes in customer demand, rather than lowering factory utilization entirely, he said.
AUO is allocating more capacity to the production of non-consumer electronics displays, such as those for PCs and monitors, while reducing capacity for TV display panels, Peng said.
Innolux and AUO said that order visibility is low for the second half of this year, as most orders would be shipped to clients in early October rather than at the end of the month to avoid an extra 10 percent US tariff levied on TV imports from China.
“We cannot be certain if we would enjoy holiday season demand in the second half,” Peng said.
Some clients frontloaded their orders in the first half to avoid the US tariffs, which led to an increase in their inventories, he said.
Prices of displays used in consumer electronics would continue to decline as a supply glut continues, he said.
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