January Panel Sales – Taiwan
All three Taiwan based panel producers saw revenue decline on a m/m basis, with both Innolux (3481.TT) and Hannstar (6116.TT) seeing y/y declines, while AU Optronics (2409.TT) saw a 4.5% increase. For reference, AUO’s typical[1] January sales decline is 10.8% m/m. That said, AUO saw both a m/m and y/y decline in area shipped, likely a reflection of the lower utilization rates seen by many LCD panel producers as demand slows and panel prices decline. Innolux saw sales declines on both a m/m and y/y basis and while large panel shipments were up 2.4% m/m, they were down 1.1% y/y along with a steeper m/m and y/y decline in small panel shipments. While increased large panel shipments might have offset some of the impact of declines in large panel prices, Innolux also saw a substantial drop in small panel shipments, both on a m/m and y/y basis. Small panel production is less meaningful in terms of fab usage (m2), however small panels are usually more profitable on an m2 basis, so we expect the lower small panel shipment volume will be a contributor to lower margins for 1Q if such declines continue. Hannstar is primarily a small panel producer, so we put less weight on the large drop seen in their large panel business, which is primarily IT products, but it does give some indication as to the demand level for such products, which has been weakening as COVID-19 restrictions have been reduced.
All in January results for Taiwan based panel producers seem to be in line with our expectations, which are based on our outlook that panel prices for both TV and IT panels will continue to decline in 1Q. While 1Q guidance from panel producers is a bit more optimistic than we might expect, with the concept that panel pricing will stabilize during 1Q, that has not been the case thus far, and we would expect that if February results continue to be weak, which we expect will be the case, the hope that panel prices will stabilize will likely be pushed out to 2Q and panel producers will likely have to lower utilization rates again in order to slow the decline in panel prices.
[1] 5 year average (2017 – 2021)
All in January results for Taiwan based panel producers seem to be in line with our expectations, which are based on our outlook that panel prices for both TV and IT panels will continue to decline in 1Q. While 1Q guidance from panel producers is a bit more optimistic than we might expect, with the concept that panel pricing will stabilize during 1Q, that has not been the case thus far, and we would expect that if February results continue to be weak, which we expect will be the case, the hope that panel prices will stabilize will likely be pushed out to 2Q and panel producers will likely have to lower utilization rates again in order to slow the decline in panel prices.
[1] 5 year average (2017 – 2021)
AU Optronics - Monthly Sales - 2018 - 2022 YTD - Source: SCMR LLC, Company Data
Innolux - Monthly Sales - 2018 - 2022 YTD - Source: SCMR LLC, Company Data
Hannstar - Monthly Sales - 2018 - 2022 YTD - Source: SCMR LLC, Company Data
RSS Feed