Panel Makers Face Impacts of Price Drop

Panel makers in Asia have been struggling with the oversupply of LCD products and have reported profit drop in the second quarter of 2018 compared to last quarter and last year.

Taiwanese panel producer Innolux announced its pretax profit of 2Q18 has decreased by 74% QoQ and 93.7% YoY at NT$ 1.01 billion (US$ 32.9 million) due to the price drop of panels in the second quarter. The price drop has also led to the operating loss for LG Display as the company revealed KRW228 billion (US$203.6 million) operating loss in the second quarter of 2018. The Korean company has reported losses in the past two quarters. AUO, however, has managed to remain profitable with its Q2 revenue of NT$75.05 billion (US$2.46 billion), up by 0.8% QoQ.

Facing the challenge of price drop, these panel companies have taken measures to rectify the current market situation. Innolux forecasted the oversupply and price drop in panels earlier this year and has been pushing its development of Mini LED applications, as well as accelerating the integration within the Foxconn group. The company has also shifted the focus to automotive panels and become the panel supplier for leading automotive manufacturers including Tesla.

LG Display, under the pressure of continuous quarterly loss, reported that it has slashed its investment plans by US$ 2.7 billion to 2020 and will lessen its LCD capacity. The Korean company said it will focus on differentiated products including narrow bezel panels, large-size TVs and commercial displays. OLED will still be the major development focus of LG Display and it is expected that the OLED TV division will bring profit to the company in Q3.

(Image: LG Display)

With its strategy of portfolio adjustment, AUO did not suffer much from the panel price drop. The company has targeted high-margin products such as extra-large TV panels and has reduced the share of standard size TV panel shipment to fewer than 40 percent of its revenue. AUO has also unveiled its plan to release Mini LED gaming products in the second half of 2018.

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