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Top-2 Taiwanese TFT-LCD Makers Face Supply Tension Due to Strong Demand

2014/09/04 | By Quincy Liang

Both the top-two thin film transistor-liquid crystal display (TFT-LCD) panel makers in Taiwan are optimistic about favorable business climate in the second half (H2) of the year.

Paul Peng, president of AU Optronics Corp. (AUO), says that his company's Q3 operational results are expected to peak, with  LCD TV panel orders to last to December to keep Q4 operations busy. Wang Jyh-chau, president of Innolux Display Corp., said that the global market faces a very obvious supply shortage. The two executives made the statements at the 2014 International Touch Panel & Optical Film Expo (Touch Taiwan), held August 27-29 in Taipei.

 

Wang Jyh-Chau, president of Innolux, a major TFT-LCD panel maker in Taiwan. (photo from UDN)
Wang Jyh-Chau, president of Innolux, a major TFT-LCD panel maker in Taiwan. (photo from UDN)

The two major players in Taiwan and global TFT-LCD industry have set goals. AUO aims to further boost production of high value-added panels to top local counterparts in profitability, with Innolux trying vigorously to ramp up production to become the No. 1 player on the island in shipment volume.

Thanks to strong demand from global vendors, who have been ramping up production to fill rising orders due to simmering sales during the peaks of the October 1 vacation in China and Christmas, with Q3 being typically yearly peaks, Peng said. AUO's H2 equipment utilization has remained high, he added, which is expected to further upgrade  revenue and profitability. Panel supply tension has beset most major applications as notebook PC, TV (especially 32-, 42-, 50-, 55-, 65-, 75-, and 85-inch), and monitor.

 

Paul Peng, president of AUO, aims to make his firm the most profitable panel supplier in Taiwan (photo from UDN)
Paul Peng, president of AUO, aims to make his firm the most profitable panel supplier in Taiwan (photo from UDN)

AUO's senior vice president G.H. Tsai pointed out that LCD TV panel order visibility lasts until December. Production ratio of over-50-inch TV panels account for over 30% of AUO's overall TV-panel capacity, he added, so the firm's supply shortage exceeds that of counterparts.

Regarding profitability, Peng said that both LG Display of South Korea and Japan Display Inc. (JDI) of Japan reported losses in Q2, showing that high market share does not necessarily mean profitability. Thanks to the correct strategy focusing on higher-margin products, he explained, AUO's Q2 profits were higher than those of larger-capacity counterparts.

Innolux's president Wang pointed out that his company's supply shortage of notebook PC panels now is about 20%, while the firm's monitor and TV panel capacity also face serious supply tension. Innolux is on full-capacity production with all inventory having been sold. Wang expressed optimism towards the 2015 TV-panel market due to the global TV-panel supply tension through 2014, with new capacity at Chinese panel suppliers next year to turn out products for bigger TV screens.

Bai Weimin, vice chairperson of China Video Industry Association (CVIA), pointed out that China is scheduled to procure about 27 million LCD panels, totaling  US$4.5 billion, from Taiwan in 2014, but Taiwanese panel suppliers' continued supply tension might not fill orders from Chinese system vendors.

There are six 8.5-generation (8.5G) panel production lines in China, and the number will total 10 in the near future, said Bai. However, 10 lines still can satisfy only 60% to 70% of the TV-panel demand from Chinese and international TV vendors in China. Bai said that she anticipates even-better cooperation between companies of the flat panel display (FPD) industry in Taiwan and China for enhanced global competitiveness.