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Flat Panel Makers To See Impact From Oversupply In 2019, Says AUO Chairman

Oct 23, 2018

Flat panel makers are expected to see their operating results vary widely in 2019 as they adopt different approaches in strategy, market and product development to address the challenge of oversupply which is likely to become a normal for the industry beginning next year, according to Paul Peng, chairman of AU Optronics (AUO).

For all of 2018, the supply-demand ratio of flat panels is to stand at around 106-107%, which is considered to be relatively stable, Peng said, but the supply and demand situations will change starting 2019 and onwards due to the availability of new production capacities.

Facing the looming challenges, AUO will be able to find out the best business model to enhance its competitiveness through differentiations in technology, management and product development to continue to create profits, Peng said.

With smart investment strategy for capacity expansion and focusing on high-end customized niche-market segments, AUO has been able to operate at full capacity over the past 3-4 years, Peng claimed.

As compared to rapid capacity expansions adopted by rivals, notably those players in China, AUO completed a small-scale, second-phase expansion of its 8.5G 8B fab in central Taiwan in the first half of 2018.

The second-phase facilities, which command a production capacity of 25,000-30,000 substrates a month, reached its full capacity in the third quarter of 2018, focusing on production of TV panels in 43-, 55- and 65-inch sizes, Peng said.

The second-phase expansion project also brings total capacity of the 8B fab to over 100,000 substrates a month.

Although OLED panels currently account for a certain ratio in the handset panel market, Peng said that he believes OLED TVs will remain a niche-market segment in years to come with a market ratio of below 5% compared to about 1% at present.

LCD technology will remain the mainstream for IT and TV panels in the future due to the high price/performance ratios of LCD panels, Peng commented.