Vertical Divider

AUO CEO Expects Supply Glut to Continue; No Immediate Recovery
February 11, 2019

Paul Peng, AUO chairman said an imbalance of the supply and demand of panels will exist for a long period and global economic environments are becoming unstable. Having negative net margins in 2018 and facing a challenging business environment of excess supply from China and new OLED technology from Korea, AUO has created three core strategies of focusing on sustaining financial health, value enhancement and continuous innovation that will enable it to maintain the leadership in the industry.

• To strengthen its financial capability, AUO continue with a “smart investment policy” to build-up optimal production capacity and optimize its capex of about NT$30-40 billion (US$975-1,299 million) a year to enhance 
• For value enhancement, the company will expand its deployments in the customized application markets, including in the automotive, industrial-control and commercial sectors focusing on high-end and high-margin niche products, Peng added.
• For innovation, AUO filed 586 applications in 2018 trailing after only Taiwan Semiconductor Manufacturing Company (TSMC), which led all companies with 944 filings.

AUO began shipping high-value mini LED-based gaming monitor panels in the fourth quarter of 2018 and will develop similar products for niche markets in 2019, Pend said, adding that AUO will also accelerate its development of micro LED products. The company expects shipments of large-size panels to decline 7-9% sequentially with their ASPs dropping 4.6%; shipments of small- to medium-size panels will fall 20% with their ASPs edging upward slightly. Given the sluggish shipment outlook and the fact that the company's core display business already posted an operating loss of NT$1.26 billion in the fourth quarter of 2018, AUO is likely to incur losses for the first time in years in the first quarter of 2019.