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Panel makers could face losses this year, despite price rebound

Panel makers could face losses this year, despite price rebound

Taiwan's display panel sector might face losses this year, even though their product prices are expected to rebound in the coming months, an industry researcher said Tuesday.

Display panel prices are likely to rebound during the second and third quarters, on possible closures of factories operated by South Korea's Samsung Display and a cut by Chinese manufacturers in production of 32-inch panels, said David Hsieh, senior director for displays at the IHS Technology group.

Hsieh said during the 2016 IHS Taiwan Display Conference on the first day of the two-day event that 32-inch panels are no longer mainstream, while shipments of 40-inch and larger products are on the rise.

He forecast that 55-inch and 65-inch panels will see the most rapid growth during the second half of this year.

Panel prices declined by 30 percent last year and further dropped in the first quarter of this year, because of Chinese manufacturers' expanding production, he said

The declining prices could lead to losses for Taiwanese panel makers this year, he said.

Taiwan's top two panel makers -- AU Optronics Corp. (AUO) and Innolux Corp. -- remained among the world's top three in terms of shipments in 2015, with South Korea's LG Display Co. taking the number one spot, according to WitsView, a research unit of Taiwan-based TrendForce Corp.

AUO and Innolux posted net profits of NT$4.84 billion (US$149.76 million) and NT$10.8 billion, respectively, in 2015, but both suffered losses during the October-December period.

Hsieh said that Taiwanese panel makers are in an awkward position, as they face growing competition from Chinese rivals and have not caught up with South Korean manufacturers' development of organic light-emitting diode (OLED) technology.

Taiwanese companies, he said, are trying to survive in the challenging market and improve their competitive edge by adding value to their products. The situation could become more challenging if Apple Inc. begins adopting OLED screens in its smartphones in 2017, he added.

Chinese panel manufacturers are forecast to surpass Taiwanese companies in terms of production capacity around the end of this year, and to create pressure on South Korean firms at the end of 2017, according to Hsieh.

Meanwhile, Hsieh said, Samsung and China's top six television manufacturers are expected to increase their purchases of panels this year, because prices "have no room to drop further," and this can drive up demand.

There is still an oversupply of panels this year, but the gap between supply and demand is not big and might become smaller next year if panel makers close more old factories, according to Hsieh. (By Pan Chi-i and Kay Liu)

Updated : 2022-05-18 17:08 GMT+08:00