Flat-panel maker Innolux Corp (群創) yesterday said it has seen earlier-than-expected restocking demand from customers in preparation for the Black Friday shopping season, an early indicator that the industry is poised to recover after prices likely bottomed out this quarter.
“The inventory levels on the channel side, or on the customer side, are all very low. That is why rush orders keep coming. That is why we even see customers pre-ordering for Black Friday,” Innolux chairman Jim Hung (洪進揚) told investors at a teleconference.
Customers used to conclude supply contract negotiations in April, but they are willing to strike deals this month, as there is scant room for further downside in terms of panel prices, Innolux said.
Photo: Chen Mei-ying, Taipei Times
Hung said he expects a single-digit percentage improvement in factory utilization this quarter.
Factory utilization fell to about 75 percent in the fourth quarter of last year, down slightly from the previous quarter, he said.
As inventory digestion approaches a healthy level, Innolux expects panel prices to rebound for major applications, from TV panels to those used in notebook computers and monitors, company president James Yang (楊柱祥) said.
Yang said TV panels enjoyed a “juicy rebound” in the fourth quarter of last year, and panels for computers and monitors would follow suit this quarter or next quarter.
“We hold a cautiously optimistic view about the second quarter, which should be the point of rebound,” Yang said.
Innolux also said it has signed an agreement with India’s Vedanta Group to transfer its flat-panel manufacturing technology, to tap into India’s TV market and answer customers’ calls for capacity diversification.
Some key customers have asked the company to allocate capacity outside of Taiwan and China, due to concerns over geopolitical tensions, Innolux said.
Based on the agreement, Innolux would help Vedanta build a flat-panel production line in India and help license its intellectual property, in line with New Delhi’s “Make in India” policy.
Innolux did not provide details about its strategic partnership with Vedanta, saying cooperation would largely depend on government approval.
Market researcher Omidia said the planned fab, which would be the first flat-panel factory in India, would be similar to Innolux’s generation 8.6 fab.
Vedanta engineers are undergoing on-site training in Taiwan, the researcher said.
Construction is expected to begin next year and the factory is scheduled to start production in 2026, it added.
Innolux would likely receive a one-time technical transfer payment and collect ongoing royalty payments per display when mass production begins, the researcher said.
Innolux said quarterly losses last quarter narrowed slightly to NT$12.39 billion (US$404.5 million), compared with NT$12.75 billion in the third quarter of last year.
The company attributed the improvement to robust cost management efforts, which helped boost gross margin to minus-15 percent from minus-18.7 percent in the prior quarter. Operating margin also improved to minus-26.7 percent from minus 32-percent.
Last year, Innolux lost NT$27.99 billion, or a loss per share of NT$2.76, its poorest performance in about a decade.
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