By John Liu ,The China Post
TAIPEI, Taiwan — Panel makers Innolux Corp. (�s��) and AU Optronics Corp. (�F) together occupy over 30 percent of the market share, which makes a merger between the two unlikely, Innolux Chairman Tuan Hsing-chein (�q����) said after a shareholder conference yesterday. If a merger goes through, the sheer size of the two companies will make management very challenging, Tuan said, adding that there are also concerns that a merger will be in violation of the U.S. antitrust law. However, it does not mean a merger is out of the question. Once the companies are dissolved into smaller business units based on product lines, such as large, medium and small panels, a merger between different business units is more likely, said Innolux’s chairman. In addition, Tuan pointed out four major changes in the industry over the last couple of years.
The first is the rise of Chinese brands in the smartphone industry like Huawei and Xiaomi; the second is the low temperature poly-silicon panels’ growing market share; the third is smartphone panels’ fast advancing technology, which in turn phase out traditional panels; the fourth is Japanese firms’ gaining an edge in the wake of the yen’s depreciation.
Innolux Forecast Good Demand in Latter Half of 2015 In regards to the company’s operation, Innolux President Wang Jyh-chau (���ӶW) said the demand for large-size TV panels now still exceeds the supply; and the demand for smartphone panels is similarly strong, albeit price competition is getting more intense. Demand for information technology panels, on the other hand, is not as large, and Wang attributed it to the delayed launch of Windows 10. But after the product is unveiled in July, sales of IT panels are expected to climb back, Wang predicted. Innolux said it would enter the India market with Hon Hai Precision Industry Co. (�E��). However, given the uncertainty about the country, Innolux will consider setting up panel module plants first.
China’s Supply Chain Not the Only Barrier In the press conference, Innolux chairman Tuan also commented on China’s industrial supply chains, which are becoming full-fledged and widely considered a major threat to Taiwanese firms. China’s supply chains have received greater attention simply because China shares with Taiwan the same language and culture, while in fact, supply chains originating in Japan, South Korea, the U.S. also pose a threat to local businesses, Tuan said. It is not the first time that Taiwan faces competition from China’s supply chains, and it certainly won’t be the last, Tuan said, adding that Taiwan should not evade the challenge and should strive to develop its strength. The panel industry has encountered setbacks. Lack of water, utility, labor, money and industrial strategy have strained its development, said Innolux President Wang. However, Innolux’s debt has been cut from NT$300 billion to NT$68 billion.