Flat-panel maker Innolux Corp (群創) said it is scouting new manufacturing sites outside of China in the latest efforts to maintain supply chain resilience amid prolonged geopolitical tensions and customer demand.
Innolux has built LCD panel module assembling lines in Taiwan, in a bid to increase its manufacturing capacity beyond China partly due to requests from customers, who are also diversifying production globally.
“We aim to build backup capacity, but it is unlikely to replace our Chinese manufacturing sites, or any companies in any sectors, not just the technology sector. China has deployed extensive infrastructure,” Innolux chairman Jim Hung (洪進揚) told reporters on Friday.
Photo: CNA
“This is something we definitely have to do, given changes in geopolitical environments and changes in customers’ [demand],” he said.
Miaoli-based Innolux plans to select one site by the end of next year from several options in Africa, South America, Southeast Asia and India, Hung said.
In addition to factoring in manufacturing costs, an ideal site should be close to the market and customers, be easily accessible to raw materials, have sufficient local labor supply and strong tax incentives, the company said.
One customer has requested that it set up a production line in Africa to support local supply, Innolux said.
The manufacturer is not the only panel maker considering expansion outside China. AUO Corp (友達) has said it would finalize a decision about where to build a new overseas factory early next year.
The electronics company has set a timetable to start production in the factory in 2025.
Innolux said it would be careful in building any new overseas factory, as the business outlook is gloomy.
Innolux said it has received some rush orders for flat panels used in notebook computers and monitors, which would help speed up inventory digestion for the whole LCD supply chain.
The new orders trickled in after a series of television panel orders came earlier this quarter when television panel prices fell to a sweet point.
The company expects factory utilization to stay at about 65 percent next quarter, close to the level this quarter.
However, the company is to raise usage of its panel module production lines to about 80 percent next quarter from its current 65 percent, to prevent COVID-19 infections in China from cutting module production.
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