What Display Daily thinks: Instead of always looking at things from a technology perspective, particularly in this instance, it might be best to look at how the automotive supply chain works.
For display manufacturers, it is simple. There are Tier 1 suppliers and then there are OEMs. The OEMs make the cars, and the Tier 1 suppliers sell them the components and parts. AUO is transitioning into being a Tier 1 automotive supplier. A panel manufacturer would probably be selling to an AUO who would then be selling on to an automotive OEM. That’s a lot of slices of pie to share when the margins are low, and for automotive OEMs, the price of modern displays in their cars is a big leap compared to traditional dials and knobs.
So, AUO is doing the right thing, but it also needs to focus on MicroLED because, putting aside the technical argument, it makes no sense for AUO to be at the mercy of Chinese or South Korean panel manufacturers. Supply, wholesale costs, and support become an issue. So, AUO is a MicroLED maker and a Tier 1 automotive parts supplier.
It is also hard to see how a company would work with an LG Display or Samsung Display as compared to the more amenable and accessible Chinese counterparts. I like Stacy Wu’s analysis of the automotive display market over at Omdia.
Korea’s display giants may find themselves overwhelmed by the options afforded by competitors in Taiwan and Mainland China. I have said it repeatedly, LG and Samsung just lack the agility of their competitors. They also lack more aggressive pricing and distribution strategies, hog-tied by their brands most likely. Well, maybe panels are where you fight price, and displays are where you add the value. As it stands, I don’t think the penchant of automotive OEMs to experiment with higher end displays will last for long. They will normalize and figure out what works best from a consumer and operational mode, and display strategies will be put in place that essentially tighten up the free for all of dashboard design that exists today.
It has to be this way. Cars are not meant to be experiments in man-machine interfaces. You have to drive them around without hitting other cars or people because the touchscreen isn’t responding or you have to click-through about seven screens to get to the one you want while you are driving.
And, yes, MicroLED makes more sense in automotive than OLED. Once the MicroLED industry gets over its broken heart because of Apple, and once it decides that it has fooled around with Alt Reality long enough, it might start to focus on the real business of making products that people will actually benefit from. Sensors and autonomous driving technology are going to be dominant drivers of next generation automotive development. What better technology is there for under display sensors, responsiveness, longevity, power consumption, and even lighting, then MicroLED.
AUO Navigates Competitive Landscape with Strategic Shift
AU Optronics (AUO) is proactively diversifying its business model to mitigate risks associated with the highly competitive panel industry, largely influenced by China’s market dominance. At a recent shareholders’ meeting, Chairman Peng Shuanglang announced the company’s objective to reduce its reliance on pure panel sales to below 70% of its revenue by next year.
The global panel industry faces significant pressures, with China controlling approximately 70% of the global production capacity. This centralization means any disruption within China can have widespread effects on the industry. To navigate these challenges, AUO has acquired Germany’s Behr-Hella Thermocontrol GmbH (BHTC), which specializes in automotive human-machine interfaces and air-conditioning systems. This acquisition is part of AUO’s broader strategy to stabilize revenue and profit margins through the automotive sector, which is characterized by customized products and steady demand.
Peng Shuanglang highlighted the competitive tension between MicroLED and OLED technologies. While OLEDs are popular, their shorter lifespan limits their suitability for automotive applications where safety is critical. MicroLED technology, which does not suffer from these lifespan issues, is emerging as a more reliable option. AUO aims to reduce the cost of MicroLED modules by half every two years, with the goal of achieving price parity with OLEDs by 2029 or 2030. The company expects to ramp up mass production of automotive MicroLED panels by 2027.
AUO’s automotive service solutions have seen robust growth, with revenue surpassing NT$43 billion ($1.4 billion) in 2023, reflecting an annual growth rate of over 25%. The company has also successfully shipped 1.39-inch MicroLED smartwatch screens and plans to expand into automotive displays, large spliced TVs, and transparent displays, leveraging MicroLED’s advantages in brightness and longevity.
