Flat-panel maker Innolux Corp (群創) yesterday said it would cut its factory utilization rate by more than 5 percentage points this quarter to ensure stable earnings, as lingering inflation risks and uncertainty about interest rate cuts has dampened demand.
As a result, shipments of TV and PC panels would shrink by a low-single-digit percentage this quarter compared with last quarter, Innolux said.
The company’s average selling prices would remain steady compared with last quarter’s US$259 per square meter, it said.
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“We have not seen any indications of a stronger pick-up in demand in the second half of this year,” Innolux president James Yang (楊柱祥) told investors. “Therefore, any upward or downward adjustments should be minor.”
TV panel demand would only recover in the second quarter of next year, when the industry’s seasonal demand cycle emerges, Yang said.
Business prospects for next year appear better, as the growth in panel demand would be driven by increased PC replacement, the company said, referring to the launch of notebook computers with artificial intelligence (AI) features and the introduction of Microsoft Corp’s new Windows operating system.
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) was in talks with Innolux to buy a 5.5 generation plant in Tainan as it seeks to build new chip packaging capacity using fan-out panel-level packaging (FOPLP) technology while doubling its advanced packaging capacity this year and next year, local media reported last week.
The plant was idle late last year, as it has no cost competitiveness in producing flat panels.
Innolux did not comment on the speculation yesterday, but said it aimed to create a “national team” with partners to develop FOPLP technology that is used in chips for AI PCs.
The sale of the Tainan plant should be in line with the company’s strategy to enhance its chip packaging technology, it added.
TSMC last month told investors that it was looking at FOPLP technology, but no solutions would be available for customers within three years.
Innolux swung into the black last quarter with net profit of NT$1.13 billion (US$34.62 million) and broke eight consecutive quarters of losses, thanks to higher panel demand and price hikes for TV panels as major sports events such as the Paris Olympics and UEFA Euro stimulated TV demand.
The company lost NT$4.1 billion in the first quarter and NT$5.74 billion in the second quarter last year. Gross margin improved to 10 percent last quarter, compared with 4.2 percent in the first quarter and 0.6 percent in the second quarter last year.
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