Digitimes reported that Innolux is stepping up its game plan by accelerating its efforts to diversify and adapt. Instead of solely relying on the unpredictable display industry, the company is making smart moves. They’re putting their investments into upgrading their existing product lines and exploring new possibilities beyond just panels. There were already rumblings of this pullback, of sorts, with a pullback on display production.
It’s hard to be optimistic about the AR/VR headset market even with Apple’s highly anticipated launch of a headset and Meta’s aggressive stance with the Quest 3. You just have to take a look at the recent AR/VR market report from IDC that says AR/VR headset sales declined 54.4% in Q1’23.
Then, there’s the smartphone market, where there is a general consensus among market trackers that this year will see a bigger decline in shipments than anticipated, and the same is very true of PC sales.
On the other hand, we have the coterie of pronouncements about a second half of 2023 rebound for panel sales.
First of all, there has never been a case of anyone being able to predict the future so, it’s hard to find fault with prognostications, but the Q1’23 results are coming in below dampened expectations from the previous set of forecasts, and that sounds an alarm bell for anyone thinking the glass is half full.
All indications are that Q2’23 is going to come down below expectations – expectations that were already set pretty low – while recurring poor financial results will only lead to further cost-cutting and retrenchment. Even though, it would be wise to double down on further investment in existing supply chains and customers, short term operating adjustments will have to be made to appease the money gods.
The only bright spot is the automotive sector, and particularly the growth of EV sales. Chinese EV OEMs are showing remarkable growth, and Tesla, the industry’s bellwether, seems to be riding high after a little bit of shakiness these last nine months.
In fact, automotive may be the best opportunity for an exploration of new possibilities, as being pursued by Innolux, because the complete package that can be offered: displays, batteries, in-car electronics, even LED headlights. It’s safe to say that diversification among display manufacturers is going to become a key point of strategy, with some pluses and minuses.
On the minus side, consolidation in the flat panel market looks like it will create two fronts for LCD displays and OLED displays between China and Korea. That just squeezes the rest of the industry to conform to a two track supply chain.
On the plus side, the display ecosystem should expand with new opportunities for materials suppliers, startups, and niche manufacturers, buoyed by innovative use of light emitting products, which is another way at looking at it.
And, of course, ePaper displays should not be discounted, as well as the growth of digital signage. Sure, it is a lot easier to model your future around the sale of millions of TVs, smartphone screens, and computer monitors, but there has to be some consolidation, at least the business level, in the industry to acknowledge the growth of display products that are driven by information and not content.
All I am saying is that things have to change and the traditional product mix in displays may not be enough. Mergers and acquisitions are likely to rise in the second half of the year, whether for defensive or aggressive reasons, and changes in the product mix at the manufacturing level will be the only option available to all but a handful of very big and powerful panel makers who can vertically integrate.
You can start by shopping around for new ideas or new companies. Either one is a safe bet going forward.
