China Panel Makers Making Headway

China-based flat panel makers appear to have outraced their rivals in Korea, Taiwan and Japan, judging from the sales performances of individual players in the first quarter of 2019.

Based on available information, at least four Chinese panel makers – BOE Technology, China Star Optoelectronics Technology (CSOT), Tianma Microelectronics and Visionox – posted on-year revenue growth in the first quarter of 2019 due mostly to capacity ramps.

With the exception of Visionox, the other three Chinese players were also enjoying profits in the first quarter, with BOE reporting a net profit of CNY1.052 billion (US$152.35 million), and Tianma with an operating profit of CNY290 million.

Visionox incurred losses in the first quarter due to its heavy spending on capacity expansion.

In Korea, LG Display has reported operating loss of KRW130 billion (US$110.616 million) and net loss of KRW63 million for the first quarter, although revenues increased 4% sequentially to KRW5.879 trillion.

Industry sources attributed LG Display’s losses to the reduced ASP of its panels as measured per square meter and decreased shipments of high-priced small- to medium-size panels. Nevertheless, the company has moved toward focusing on OLED panels to improve its financial performance.

Meanwhile, Samsung Display, the world’s largest supplier of OLED panels currently, also posted net loss of KRW270 billion in the first quarter, the company’s first quarterly loss in three years.

Samsung Display met the headwind in the first quarter as its shipments of LCD TV panels were weighed down by aggressive marketing by Chinese rivals, and its shipments of OLED handset panels were lower than expected due to lackluster sales of iPhone devices.

In Taiwan, AU Optronics (AUO) saw its operating loss widen to NT$5.1 billion (US$161.74 million) in the first quarter of 2019, from an operating loss of NT$1.454 billion a quarter earlier. AUO posted a net loss of NT$3.69 billion or NT$0.38 per share for the first quarter.

Innolux also incurred net loss of NT$3.7 billion in the first quarter, the company’s second straight quarterly loss. EPS for the first quarter was negative NT$0.37.

Japan Display (JDI) posted its ninth consecutive quarterly net loss of JPY98.6 billion (US$894.2 million) in the first quarter of 2019, hit by weaker-than-expected demand from Apple.

The company is currently pursuing a bailout deal with a consortium led by Taiwan- and China-based companies, including touch panel maker TPK Holding.

The differences in the panel makers’ results were attributable to the Chinese government’s subsidy support for the country’s flat panel industry, noted some industry watchers.

With panel capacity remaining loose in the second quarter of 2019, most panels makers operating outside China are hardly able to swing back to profitability in the near term, said the observers, adding that some makers may continue to operate in the red in 2020.―Digitimes

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