Flat-panel display supplier AUO Corp (友達) on Wednesday said it was monitoring the potential fallout from US tariff uncertainty after reporting a profit for the second straight quarter, as customers rebuilt inventory while others pulled in orders ahead of new tariffs.
AUO holds a cautious attitude toward this quarter and visibility for the second half of the year is blurry, as customers are closely watching how the US government’s tariff policy would affect display demand and market consumption, the company said.
“The company had expected the overall market to reach a relatively balanced situation and return to seasonal patterns. However, the tariff uncertainty might have disturbed seasonal demand this year,” AUO chairman Paul Peng (彭双浪) told an online earnings conference.
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“We have seen some customers’ pull-in demand amid potential fallouts from the US tariff policy,” he said.
As panel displays might become the next item subject to levies under a separate US tariff scheme, AUO is considering working with supply chain partners to come up with plans for manufacturing in regions that have lower tariffs, Peng said.
However, the company is not considering a front-end panel plant in the US due to a lack of panel assembly lines there, he said.
As a panel display and components supplier, AUO expects a mild impact from US tariffs, Peng said.
“About 10 to 15 percent of AUO’s total revenue comes from direct and indirect exposure to the US,” he said, adding that the company is shipping goods on free-on-board terms, meaning that customers would be responsible for duty levies.
The company would closely monitor US tariff developments in the second half of this year and work with customers to adjust manufacturing sites, he said.
AUO president Frank Ko (柯富仁) said the company’s display business last quarter benefited from inventory restocking demand following strong TV sales in the fourth quarter of last year and Chinese subsidies to encourage people to retire old consumer electronics.
The company said the display business in the first quarter performed better than expected, but revenue this quarter is likely to decline slightly due to a higher comparison base.
The display business made up 54 percent of the company’s revenue last quarter.
Its mobility solution business, including displays for auto cockpits, is expected to see revenue drop by a low-single-digit percentage sequentially, the company said.
Revenue from its vertical solution business, including display-related solutions for the retail, medical and industrial segments, is projected to grow by a mid-to-high single-digit percentage, it said.
During the March quarter, AUO’s net profit more than doubled to NT$3.29 billion (US$102.8 million) from NT$1.62 billion the previous quarter. During the same period last year, the company lost NT$3.53 billion.
Operating income improved to NT$1.14 billion last quarter, snapping two quarters of operating losses, while gross margin rose to 12.2 percent, from 7.9 percent in the previous quarter and 3.3 percent in the same period last year, the company said.
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