Taiwanese LCD panel makers AUO and Innolux are expected to reduce factory utilization this quarter due to an industry downturn. Innolux has said that it is putting on hold production, and furloughing employees, at its Gen 5.5 plant in Taiwan. AUO is restructuring its organization to shift production lines, and reduce overheads. This is all happening while the two companies are busy showcasing products Touch Taiwan 2023.
I don’t buy into the projections of a better second half of 2023 for all but a couple of Chinese manufacturers of LCD panels. Squeezing prices through inventory control, and managing inventories doesn’t really create any sort of a market opportunity. It’s all preparation for the worst case scenarios. The stark reality of crushing demand has no relief on the horizon, and that’s all there is to it. Pricing on TVs has been nothing short of aggressive for months, and anecdotally it may seem like there’s a return to normality, but there’s a constant state of discounting happening which has not let up since the end of last year. It will probably get worse by the third quarter.
Yes, the display industry is being restructured to accommodate everything from geopolitical pressures to macroeconomic concerns. None of the changes are signaling preparedness for an uptick in business any time soon. The US elections in 2024 are likely to exasperate the situation because, undoubtedly, the trade battles with China will be front and center in debates. In the meantime, economies will limp along, and consumers will be wary. The atmosphere for optimism is, to put it mildly, oppressive.
