AU Optronics (AUO) is exerting efforts to push forward its value transformation to tackle multiple headwinds, including oversupply, low panel prices and economic uncertainty, according to company chairman Paul Peng.
As part of its transformation, AUO has appointed Frank Ko, a former veteran of the company, as president and COO, replacing Michael Tsai.
Ko has extensive experience in the display industry, gained through two decades of involvement in the display field. In recent years, Ko served as chairman of e-paper solution provider E Ink Holdings (EIH). Thus, Ko is likely to provide insights into the display industry through a different angle, while accelerating the transformation at AUO.
Apart from the management shake-up, AUO has been shifting more of its production capacity for the manufacture of IT panels from its previous focus of TV panels, where pricing pressure has been mounting, Peng said.
AUO indeed saw its product mix improve significantly in the second quarter of 2019, with the ratio of TV related revenues to total sales falling slightly to over 30% from the previous peak of nearly 50%.
AUO’s operations have not been much affected by the US-China trade dispute as the company boasts a strong product profile, Peng said, adding that the company has not landed more windfall orders coming from clients relocating production.
However, the rising trade conflicts have flared up market uncertainties, and relevant economic forecasts have begun to adjust downwards, with the consumer market being hit hardest. And the trade conflicts are bound to bring tremendous structural change in the entire supply chain – the so-called industrial restructuring, Peng opined
The industrial restructuring will unsettle the previous large-scale, centralized production model, replacing it with a decentralized small-scale production model which is likely to ramp up significantly overall production cost, and consequently higher consumer product prices.
To avoid being trapped in such a vicious circle, AUO and other panel makers have to push forward value transformation by adding value into integrated displays or solutions that can be used in fields including IoT, smart retailing, medical care, education and automotive segments, Peng said.
To that end, AUO has enhanced its deployments in four major areas: healthcare, smart manufacturing, smart retailing and circular economy. For healthcare, AUO has set up AUO Care that will offer health care solutions targeting markets in Taiwan and China.
The establishment of U-Fresh Technology aims to roll out smart water recycling solutions and is part of its circular economy operations. ComQi, an AUO arm for system integration and digital signage solutions, has begun promoting its products in the US and Taiwan.
Operations of these subsidiaries will grow significantly in 2020-2021, Peng asserted. Digitimes