LCD panel maker AU Optronics Corp (AUO, 友達光電) expects value-added panels and new service solutions to account for as much as 20 percent of its overall revenue in 2023 as its transformation efforts begin to bear fruit, the company said yesterday.
AUO has been pushing for fundamental changes for about eight years, aiming to eschew the panel industry’s boom-and-bust cycles by investing in capacity for value-added panels and expanding its business scope to vertical industries in the past three years.
The Hsinchu-based firm said that it is selling value, not hardware.
Photo: Chen Mei-ying, Taipei Times
“AUO ... aims to become more comparative in terms of product value, rather than [capacity] scale. We want to make sure we can sell our products at better prices,” AUO chairman Paul Peng (彭双浪) told a media briefing at the Touch Taiwan trade show at the Taipei Nangang Exhibition Center’s Hall 1.
The company’s strategy is to “go premium” and “go vertical,” Peng said. “AUO aims to be a company that can earn stable profits.”
AUO is expanding its business scope downstream to five major areas beyond the panel industry: the smart retailing, smart medical care, smart transportation, smart entertainment and smart manufacturing segments, he said.
AUO aims to maximize its average selling price by adding services and total solutions, coupled with its flat panels, he said.
To do this, the company has been creating its own ecosystem by investing in companies in different supply chains, such as facial recognition technology developer SkyREC Inc and industrial computer maker Adlink Technology Inc (凌華科技).
The company has hired more than 1,000 artificial intelligence experts to provide smart manufacturing services, Peng said.
“Our goal is to generate revenue of between 15 percent and 20 percent from premium products [combined with services revenue] in 2023,” AUO president Frank Ko (柯富仁) said. “We are no longer a pure panel supplier.”
Premium panels, such as those used in high-end gaming notebooks and 85-inch displays with no bezel, contributed about 10 percent, or about NT$30 billion (US$1.07 billion), to AUO’s revenue in the final quarter of last year, Ko said.
AUO’s revenue rose to NT$270.99 billion last year.
Also attending the trade show, rival Innoux Corp (群創) yesterday said that the LCD industry is experiencing major structural change as the COVID-19 pandemic stimulates demand for panels and upends traditional supply-demand dynamics due to work-from-home and remote-learning trends.
Tight supply of chips and other key components continues to be a choke point for flat-panel industry supply chains, as pandemic-driven demand has greatly surpassed existing capacity, Innolux president James Yang (楊柱祥) told reporters.
The company has been running its factories at full capacity and trying to squeeze extra production by optimizing product lineups, but it still cannot meet customer demand, Yang said.
“We continue to be optimistic about this year’s business outlook, given the strong demand. Every company in the industry is making a profit. This industry’s development is very healthy,” he said.
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