Flat-panel makers AUO Corp (友達) and Innolux Corp (群創) yesterday said the display industry remains in the doldrums, although year-end holiday promotion sales have helped drive down supply chain inventory significantly and stimulate new demand.
Despite TV panel prices rebounding for a second straight month last month, unfavorable macroeconomic conditions — including surging inflation and strict COVID-19 curbs in China — continue to weigh on demand, the companies said.
Sell-through figures from the Double 11 holiday fell slightly short of market expectations and were weaker than last year and the year before, as China’s “zero COVID” policy and bad weather in the US depressed demand, AUO president Frank Ko (柯富仁) said.
Photo: CNA
“As most consumer electronics took a hit from the economic uncertainty, the demand for panels remained low,” Ko said. “Channel inventory has only improved lately compared with the same period last year, but the stockpiles of some models remain very high.”
“The first quarter [of next year] will not be better than the first quarter of this year,” Ko said.
It is difficult to predict whether the flat-panel industry would bottom out in the first half of next year, given uncertainty about labor supply during the Lunar New Year holiday and China’s COVID-19 policy, Ko said.
Photo: Chen Mei-ying, Taipei Times
The company will adjust factory utilization in response to market dynamics, he said.
Ko made the remarks on the sidelines of the Healthcare+ Expo Taiwan in Taipei, where AUO Display Plus Corp (達擎), which was spun off from AUO in January last year, showcased a series of displays used in healthcare applications.
AUO Display Plus, which focuses on panels for public displays, industrial devices and smart devices, is expected to contribute about 15 percent to AUO’s total revenue this year, up from 10 percent last year, Ko said.
Compared with AUO’s conservative attitude, Innolux showed a bit more optimism yesterday, saying that Black Friday and Cyber Monday sales mostly matched its expectations, which led to a significant reduction in TV and PC makers’ inventory and bode well for a rebound in demand next quarter.
“Vendors offered deep price cuts of more than 20 percent to clear inventories, and it worked,” Innolux president James Yang (楊柱祥) said at the booth of the company’s medical display subsidiary, InnoCare Optoelectronics Corp (睿生光電).
TV panel display inventory has returned to a healthy level, Yang said.
If the macroeconomy moves in a positive direction, panel prices could continue their uptrend early next year, Yang said.
However, Innolux retained its capacity utilization forecast, with factory usage expected to fall to 70 percent and even 50 percent in the third and fourth quarters.
As demand looks dismal, market researcher TrendForce Crop (集邦科技) analyst Boyce Fan (范博毓) said that in a best-case scenario, local panel makers would have to wait until the second half of next year to see a significant improvement in their bottom lines.
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