Flat-panel maker Innolux Corp (群創) yesterday lowered its shipment forecast for this quarter as soaring inflation harms consumer purchasing power and limits inventory digestion, the company told an online investors’ conference.
It predicted shipments would fall by about 12 percent this quarter from last quarter, compared with a flat forecast it made last month.
As market conditions have barely improved, Innolux would reduce its factory utilization to about 50 to 70 percent this quarter, from 90 percent last quarter, in a bid to minimize the downside risks, the company said.
Photo: Chen Mei-ying, Taipei Times
“It is meaningless to manufacture that many panels when the selling prices have dipped below the cost level and when the inventory digestion is slower than expected,” Innolux chairman Jim Hung (洪進揚) said.
Innolux would allocate more capacity for high-value-added panel products so that it could optimize its product portfolios, Hung said.
Innolux expects a tepid progress in business in the fourth quarter, even though it is a peak season for the electronics industry due to back-to-school demand and year-end holiday shopping sprees.
Innolux drifted into the red with losses of NT$4.74 billion (US$158 million) in the second quarter, ending seven straight profitable quarters, corporate data showed.
The panel maker is pinning its hopes on power supply cuts in China’s Sichuan Province earlier this week for a moderate rebound, as insufficient power supply would suspend panel manufacturing and ease the glut, speeding inventory digestion, it said.
In the best-case scenario, the power cuts would set the scene for a marked recovery in the first quarter of next year following Lunar New Year holiday sales, it said.
The firm estimates that the power supply constraints would cut China’s panel production 3.6 to 5 percent, which is equivalent to a monthly reduction of 2 million to 3 million 32-inch panels, Innolux president James Yang (楊柱祥) told investors.
As Sichuan authorities are prioritizing electricity supply to households over industry users amid persistent high temperatures, Chinese panel manufacturers saw power supply slump to about 30 percent of their average consumption, Yang said.
“That would not be enough to keep production lines running at all,” Yang said.
“If things progress in a positive direction, we believe [the industry would hit] the bottom at the end of this year. We hope we will have a good start next year,” Yang said.
Innolux has seen positive signs for the TV panel segment, citing better TV set sales in China and the US during annual promotions in June, while it also holds an optimistic view about the world’s notebook computer market as the COVID-19 pandemic changed people’s lifestyles and working patterns.
Hybrid working, and remote learning and entertainment are to keep global notebook computer shipments at a high level of 200 million to 220 million units per year over the next few years, Yang said.
Innolux is planning to keep its capital spending for this year unchanged at NT$26 billion.
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