LCD panel maker AU Optronics Corp (AUO, 友達光電) yesterday reported that net profit for last quarter more than halved as a persistent decline in TV panel prices eroded gross margin and drove down its bottom line to the weakest level in one-and-a-half years.
Net profit tumbled 52.6 percent to NT$4.2 billion (US$143.49 million) during the three-month period ending in December last year, compared with NT$8.86 billion in the third quarter of last year. That represented a 53 percent slump from NT$8.97 billion a year earlier, a financial statement showed.
Gross margin slid to 13.9 percent after panel prices fell 5.6 percent, compared with 17.5 percent in the prior quarter and 18.8 percent a year earlier.
Last year as a whole, net profit more than quadrupled to NT$32.36 billion, compared with NT$7.82 billion in 2016.
That marked the firm’s strongest annual net profit since 2008.
“Last year was the fifth consecutive profitable year for AUO, which is rarely seen in the LCD panel industry,” AUO chairman Paul Peng (彭双浪) told investors.
This year “is the best of times and the worst of times. It is a year full of challenges and opportunities for AUO,” Peng said. “Nonstop and dramatic capacity expansion from Chinese players might make oversupply a new norm.”
China is expected to become the largest-capacity supplier, surpassing Taiwan, Japan and South Korea, Peng added.
To brace for the change in the competition landscape, AUO said it aims to boost capacity cautiously and intelligently, while producing higher-priced, niche flat panels.
“We will not rush to join the capacity race, although 10.5G factories and OLED [organic LED] panels have become hot topics,” Peng said.
OLED panels are not a cure-all for flagship smartphones in light of the lukewarm sales of some handset brands, he said.
“We intend to maintain an optimal scale. Big is not necessarily beautiful,” Peng said.
AUO said it plans to ramp up production of 65-inch 8K TV panels in the first half of this year to cope with increasing demand for such ultra-high-resolution screens.
The firm said it would also produce more 18:9 aspect ratio handset panels, as they are becoming a “must-have” for mid to high-end smartphones.
AUO plans to increase capital spending slightly to NT$45 billion this year, from NT$43.9 billion last year.
The company also plans to ramp up production of a new 8.5G production line in the second half of the year.
AUO said it expects worldwide panel supply this year to grow between 6 percent and 8 percent year-on-year, approaching the growth of panel demand as developed countries enter a new TV replacement cycle.
However, the first quarter will still be a slack period, AUO said, adding that downward price adjustments are to extend from last quarter into this quarter, attributable primarily to shrinking TV demand.
Average selling prices for PC and TV panels are to dip by a low-single-digit percentage this quarter, while shipments of those panels are to contract by a mid-to-high-single digit percentage, AUO said.
MULTIFACETED: A task force has analyzed possible scenarios and created responses to assist domestic industries in dealing with US tariffs, the economics minister said The Executive Yuan is tomorrow to announce countermeasures to US President Donald Trump’s planned reciprocal tariffs, although the details of the plan would not be made public until Monday next week, Minister of Economic Affairs J.W. Kuo (郭智輝) said yesterday. The Cabinet established an economic and trade task force in November last year to deal with US trade and tariff related issues, Kuo told reporters outside the legislature in Taipei. The task force has been analyzing and evaluating all kinds of scenarios to identify suitable responses and determine how best to assist domestic industries in managing the effects of Trump’s tariffs, he
‘SWASTICAR’: Tesla CEO Elon Musk’s close association with Donald Trump has prompted opponents to brand him a ‘Nazi’ and resulted in a dramatic drop in sales Demonstrators descended on Tesla Inc dealerships across the US, and in Europe and Canada on Saturday to protest company chief Elon Musk, who has amassed extraordinary power as a top adviser to US President Donald Trump. Waving signs with messages such as “Musk is stealing our money” and “Reclaim our country,” the protests largely took place peacefully following fiery episodes of vandalism on Tesla vehicles, dealerships and other facilities in recent weeks that US officials have denounced as terrorism. Hundreds rallied on Saturday outside the Tesla dealership in Manhattan. Some blasted Musk, the world’s richest man, while others demanded the shuttering of his
TIGHT-LIPPED: UMC said it had no merger plans at the moment, after Nikkei Asia reported that the firm and GlobalFoundries were considering restarting merger talks United Microelectronics Corp (UMC, 聯電), the world’s No. 4 contract chipmaker, yesterday launched a new US$5 billion 12-inch chip factory in Singapore as part of its latest effort to diversify its manufacturing footprint amid growing geopolitical risks. The new factory, adjacent to UMC’s existing Singapore fab in the Pasir Res Wafer Fab Park, is scheduled to enter volume production next year, utilizing mature 22-nanometer and 28-nanometer process technologies, UMC said in a statement. The company plans to invest US$5 billion during the first phase of the new fab, which would have an installed capacity of 30,000 12-inch wafers per month, it said. The
Taiwan’s official purchasing managers’ index (PMI) last month rose 0.2 percentage points to 54.2, in a second consecutive month of expansion, thanks to front-loading demand intended to avoid potential US tariff hikes, the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) said yesterday. While short-term demand appeared robust, uncertainties rose due to US President Donald Trump’s unpredictable trade policy, CIER president Lien Hsien-ming (連賢明) told a news conference in Taipei. Taiwan’s economy this year would be characterized by high-level fluctuations and the volatility would be wilder than most expect, Lien said Demand for electronics, particularly semiconductors, continues to benefit from US technology giants’ effort
RSS