Innolux: Will continue to adjust business strategies and invest heavily in R&D

After the shareholders' meeting on June 5, HannStar Display, a small and medium-sized panel manufacturer, said that its performance this quarter will be better than the first quarter, but it will remain conservative in the second half of the year and will expand its market layout of diversified products. The two panel giants AUO and Innolux expect the third quarter to enter the peak season and their views are slightly positive. However, the US-China trade war continues to rage, and TSMC may also lower its full-year outlook. The market is highly focused on the latest developments of the two panel giants in the second half of the year at their shareholders' meetings.

The panel industry is still conservative about its performance in the second half of the year. (Photo: AFP)

The revenues of major Taiwanese panel manufacturers for May have all been released. Benefiting from the rising demand, AUO (2409), Innolux (3481) and Epistar (6116) all had better revenues in May than in April. AUO and Epistar both set new monthly revenue records this year, and Innolux also set the second highest monthly revenue this year. AUO's consolidated revenue was NT$24.7 billion, up 17.9% month-on-month and down 3.91% year-on-year; Innolux's consolidated revenue was NT$21 billion, up 0.7% month-on-month and down 4.5% year-on-year; Epistar's revenue was NT$1.394 billion, up 0.8% month-on-month and down 25.69% year-on-year.

Looking further at shipments, AUO's large-size panel shipments rebounded in May, with monthly shipments of 10.08 million pieces, a monthly increase of 35.67%, adding momentum to revenue growth; small and medium-sized shipments were 10.18 million pieces, a monthly decrease of 10.1%. Although Innolux's large-size shipments declined, with monthly shipments of 10.24 million pieces, a monthly decrease of 2.85%, small and medium-sized shipments were 20.28 million pieces, a monthly increase of 1.45%.

Innolux's products are mainly small and medium-sized panels, with shipments reaching 37.72 million pieces in May, a monthly increase of 137.53%, driving revenue growth; shipments of large-size displays and own-brand products were 112,000 pieces, a monthly decrease of 23.29%.

In the face of the US-China trade war, Epistar said that currently automotive products account for 20% of its total revenue, with its main production base located in Nanjing, China. It is expected to move 20% of the Nanjing plant's production capacity back to its Southern Taiwan Science Park plant in order to meet the automotive needs of international brands. It is expected that the proportion of automotive product revenue will grow to 30% this year.

AUO will hold a shareholders' meeting on June 14. The market is concerned about whether operations have improved. Chairman Peng Shuanglang said at a recent earnings conference that due to the impact of the off-season, material shortages and other macro factors, the first quarter's performance was not as good as expected, but this year's industry is expected to be slow in the first half of the year and strong in the second half of the year. Shipments this quarter have a trend of slow growth, and in the future they will also develop towards high value-added products. However, the trade war continues to rage, and whether AUO's outlook has changed will be revealed at the shareholders' meeting.

Innolux said that the third quarter is the traditional peak season for the industry, and shipments and supply and demand conditions will be better than this quarter. In its report to shareholders, Innolux also emphasized that this year it will work towards value-added, diversification, and platformization.

Faced with fierce competition in the panel industry, Innolux said it will continue to adjust its business strategy and invest in the research and development of new technologies and products. Innolux plans to hold a shareholders' meeting on June 20 to re-elect directors. Former chairman Wang Zhichao and current general manager Yang Zhuxiang are among the nominees for directors. There is strong speculation from the outside world that the panel veteran will return to take charge.