LCD panel maker Innolux Corp. reported its worst quarterly loss in about three years, as prices fell due to a slump in demand over the slack season.
However, the Miaoli-based company expects TV panel prices to stabilize this quarter, as supply constraints of polarizers, a key component, could curb production.
Demand for flat panels used in PC monitors, laptops and small displays is picking up after bottoming out last quarter, Innolux said in a statement.
Shipments of TV and PC panels is expected to grow by a low single-digit percentage this quarter from last quarter, Innolux said, adding that prices should rise sequentially by a low single-digit percentage.
For small and medium-sized displays, shipments could be flat this quarter compared with last quarter, while prices might go up by a low-teen percentage, it said.
Last quarter, losses widened to NT$3.73 billion (US$120.49 million) from losses of NT$697 million the previous quarter and were the worst since the first quarter of 2016, company data showed.
Innolux reported net profit of NT$2.94 billion a year earlier.
“During the first quarter, sagging panel prices and seasonal weakness drove revenue down 17.1 percent quarter-on-quarter, which fell short of the company’s expectations,” Innolux said.
Panel prices fell 5.48 percent quarter-on-quarter, or 18.34 percent annually, to US$276 per square meter in the first three months of this year.
Gross margin dipped to 1.5 percent last quarter, from 6.2 percent the previous quarter and 13.6 percent a year earlier.
Innolux is not the only display supplier that suffered from the industry slump.
AU Optronics Corp. and LG Display Co reported losses of NT$3.69 billion and 63 billion won (US$53.28 million) respectively in the first quarter.
However, Innolux and AUO saw a faster deterioration in earnings before interest, taxes, depreciation and amortization (EBITDA) margins to 7 percent and 6.1 percent respectively last quarter, while LG Display enjoyed a much higher EBITDA margin of 12 percent.
IHS Markit senior director David Hsieh last month said that oversupply would be the biggest challenge for flat-panel makers this year.
Rapid capacity expansion, mostly of 64-inch TV display panels, from China os threatening to push the industry into a three-year slump, starting this year, IHS said.―Taipei Times