Display maker shares surge on rising demand and better prices


By Ted Chen, The China Post

TAIPEI, Taiwan — Shares of AU Optronics (AUO, 友達) and Innolux Co. (群創) recently surged dramatically amid rising demand, improving inventory prices and encouraging buying from foreign institutional investors that saw a 1 percent rebound from ten consecutive months of decline.

AUO shares yesterday closed at NT$11.85, gaining NT$0.42 or 0.42 percent on the back of strong foreign institutional buying while Innolux Co. (群創) closed at NT$11.4, climbing NT$0.5 or 4.59 percent. With China’s May 1st Labor Day high-demand retail season fast approaching, the average selling price for 32-inch, 39-inch and 42-inch display panels in April surged by 1 percent, or US$1 per unit, as TV manufacturers rush to stock up on inventory.

Foreign institutional investors remarked that recent developments are in line with previous expectations that the average selling price of panels would stabilize toward the end of March and begin rising in early April. Most notably, foreign institutional investors remarked that AUO and Innolux are among panel makers that have a heavy production output weighted toward high resolution 4K2K and devoid of lingering concerns arising from Apple’s slow exhaustion of inventory overstock, thus explaining the recent exuberant buying spree of company shares.

Sources close to the industry remarked that as the renminbi declines in strength, Chinese TV makers are expected to fare better in the highly competitive export markets as they ramp up production output to meet the demands of the May 1st retail high season. In addition, South Korean panel makers have become more tentative in supplying Chinese TV makers with cheap modules, in an attempt to preserve stock for their own branded TV products and to curb the growth of Chinese TV brands, representing a boon to Taiwanese suppliers who are eager to fill the gap.

Meanwhile, AUO stated that in facing the expansion of rapid production capacity observed among competitors in China, the company is developing a more diversified product lineup including curved displays and high resolution 4K2K panels with wide-gamut color. In addition, AUO stated that the new production facilities of Chinese competitors are mostly of the 8.5-generation variant, and that its 6 to 6.7-generation plants are more suited to supply the more popular 39-inch, 42-inch, 50-inch and 65-inch panels.