AUO Reports Q2 Consolidated Revenue of NT$102 B., up 8.8% from Q1

AU Optronics Corp. (AUO), a major maker of thin film transistor-liquid crystal display (TFT-LCD) panels in Taiwan, recently announced self-audited consolidated revenue of NT$34.1 billion (US$1.14 billion) for June 2014, down 2.6% month-on-month (MoM) and 7.9% year-on-year (YoY). In Q2, 2014, AUO's self-audited consolidated revenues totaled NT$102.0 billion (US$3.4 billion), up 8.8% quarter-on-quarter (QoQ) but down 9.2% YoY.

The panel supplier said that panel prices continued to rise in July and are expected to remain stable in August and September, resulting in higher revenue and profit margins in Q3.

AUO's shipments of large panels (over-10-inch) for LCD TV, desktop monitor, notebook PC, and other applications totaled 9.42 million units in June 2014, down 5.5% from the previous month. As for small-and-mid-sized panels, the shipments totaled about 18.21 million units, up 21.4% MoM.

In Q2, large panel shipments totaled 28.85 million units, down 1.1% QoQ and 5.5% YoY. Shipments of small-and-mid-sized panels in the same quarter exceeded 46.30 million units, a 38.4% QoQ increase and a 26.6% YoY growth.

Chunghwa Picture Tubes, Ltd. (CPT), another TFT-LCD panel maker in Taiwan, reported consolidated revenue of NT$4.72 billion (US$157.6 million) in June, up 0.3% MoM but down 5.9% YoY. The firm's consolidated Q2 revenue totaled NT$13.87 billion (US$462.4 million), down 7.3% QoQ.

CPT shipped about 160,000 large panels in June, down 10.1% from May, but up 7.4% YoY. Shipments of small- and mid-sized panels in the month were 41.56 million units, up 4.2% MoM, but down 2.8% YoY.

C.H. Liu, research assistant V.P. at WitsView Technology Corp., says that currently vendors' inventory are sufficient, and many Chinese brands have been aggressively restocking with an eye on the Black Friday sales peak in the U.S.

On the other hand, the continued price hikes of Full High-Definition (HD or 1080p-resolution) TV panels have narrowed the price gap from 4K2K, or UHD (Ultra High Definition), TV panels to 1.2- to 1.35-folds, from 1.4- to 1.5-folds before. WitsView forecasts the penetration of 4K2K TVs to reach 5.5% to 6% in 2014, due to its narrowing price gap to Full HD counterparts.

Liu also says that the supply tension of IT panels is being exacerbated by the increasingly strong demand for TV panels, with another major factor likely to worsen the supply shortage being the stoppage of technical support from Microsoft of Windows XP operating system (OS). Currently, the global penetration of XP-based personal computers (PCs) ranges from 25% to 30%, with that in China estimated at as high as 50%. So Liu says that the phasing out of XP support should drive demand for especially business PCs as well as monitors. Plus Microsoft's subsidizing strategy to some desktop and notebook PC models, the supply tension of monitor and notebook PC panel is expected to last for some time, according to Liu.