Thu, Apr 17, 2025 page9

• Tariffs spark manufacturing shift: AUO

  UNCERTAINTY: Innolux activated a stringent supply chain management mechanism, as it did during the COVID-19 pandemic, to ensure optimal inventory levels for customers

  • By Lisa Wang / Staff reporter
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  Flat-panel display makers AUO Corp (友達) and Innolux Corp (群創) yesterday said that about 12 to 20 percent of their display business is at risk of potential US tariffs and that they would relocate production or shipment destinations to mitigate the levies’ effects.

  US tariffs would have a direct impact of US$200 million on AUO’s revenue, company chairman Paul Peng (彭雙浪) told reporters on the sidelines of the Touch Taiwan trade show in Taipei yesterday.

  That would make up about 12 percent of the company’s overall revenue.

  

  A person takes a photograph of a lineup of smart display devices, including units from Taiwan’s AUO Corp and Innolux Corp, at the Touch Taiwan trade show in Taipei.

  Photo: Ann Wang, Reuters

  To cope with the tariff uncertainty, AUO plans to allocate its production to manufacturing facilities in countries subject to lower US “reciprocal” tariffs, leveraging its global manufacturing footprint, Peng said.

  The company has added new manufacturing sites in India, Europe and Mexico following the acquisition of BHTC GmbH, a German cockpit operation system supplier, he said.

  The company would not consider building a front-end display manufacturing facility in the US, due to expensive labor costs and the lack of a comprehensive display supply chain in the country, he said.

  

  AUO Corp chairman Paul Peng, left, and president Frank Ko pose next to a car at the Touch Taiwan trade show at the Taipei Nangang Exhibition Center yesterday.

  Photo: Chen Mei-ying, Taipei Times

  Innolux also said it had no plans to build a manufacturing site in the US.

  As a major vehicle and TV display supplier to tier-one customers, Innolux has a bigger US exposure than other display and component suppliers, chief executive officer Jim Hung (洪進揚) told a news conference in Taipei.

  The company ships vehicle displays directly to customers in the US and Europe, with direct exposures of up to 8 to 10 percent, and as TV brands are among its tier-one customers, it has to directly ship TV displays to the US, Hung said.

  

  Innolux Corp chairman Jim Hung, left, and president James Yang sit in a vehicle equipped with one of the company’s display at the Touch Taiwan trade show at the Taipei Nangang Exhibition Center yesterday.

  Photo: CNA

  Indirect exposures to the US accounted for about 10 to 15 percent, he said.

  Like most component suppliers, Innolux also ships its displays to electronic assemblers’ factories in China, Vietnam, Thailand and other regions, he said.

  In the face of rising uncertainty, Innolux has activated a stringent supply chain management mechanism as it did during the COVID-19 pandemic, Hung said.

  The aim is to ensure an optimal level of component inventory as customers are scrambling to stock up on as many goods as possible at their hubs during the 90-day tariff pause announced last week by US President Donald Trump, he said.

  With the lasting tariff challenges and geopolitical risks, Innolux would be more “selective in terms of manufacturing sites and partners,” compared with its strategies during the pandemic, he said.

  The company is considering shifting more TV panels to TV makers in Mexico from China, given that Mexico is subject to a significantly lower US import duty than China, he said.

  AUO and Innolux reported new rush orders this quarter as customers strive to avoid US tariffs.

  Hung said second-quarter revenue would outgrow Innolux’s original forecast, but he expects a weaker revenue performance in the third quarter.

  The US’ fickle tariff policy has upended the display industry’s seasonal patterns, Peng said, adding that AUO’s revenue forecast in February is no longer suitable.

  At that time, AUO had predicted revenue to grow gradually each quarter, he said.
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