Taiwanese S/M-sized Panel Suppliers See Benefits from Transformation

Taiwanese suppliers of small- and medium-sized thin film transistor-liquid crystal display (TFT-LCD) panels are seeing returns from  business transformation.

Driven by increasingly higher profit margins of automotive and industrial panels, Giantplus Technology Co., Ltd. recently said the money-losing operation of the past six quarters is expected to end this first quarter, with its third-generation (3G) panel plant in Taiwan to be sold to improve profitability.

Other players, such as Chunghwa Picture Tubes, Ltd. (CPT) and Star World Technology Corp. have also been aggressively striving to break new ground by disposing idle assets or bringing onboard strategic investors.

In recent years, Giantplus has been trying to diversify product lines for higher profit margins. In the first two months, the firm's consolidated revenue was NT$2.55 billion (US$85 million), surging 70.8% year-on-year (YoY).

The company attributes its revenue growth to its correct strategy of targeting production of display panels for budget-priced smartphones. In addition, the panel maker also has been focusing on developing and making automotive and industrial panels, which require higher technical threshold but can create higher margins.

To further strengthen global competitiveness, Giantplus has merged with CPT, whose  capacity support may enable Giantplus to possibly sell its 3G panel factory, so as to transform into a fab-less company to cut fixed cost and equipment depreciation.

CPT pointed out that it has given up production of large-sized (larger than 10-inch) panel products and is fully concentrating on small- and medium-sized panels. The firm has been steadily disposing idle assets for profit injection, and has tied up with local partner FocalTech Systems Co., Ltd. in joint development of 5-inch FFS (Fringe-field switching) and On-cell touch panels.

Driven by the merger with Giantplus, CPT's panel shipments in February increased, leading to a monthly consolidated revenue of NT$4.67 billion (US$155.8 million), up 1.4% month-on-month (MoM) and 31.7% YoY.

Star World Technology Corp., another maker of small- and medium-size panels, in the red for the past five years in a row, claimed that it has decided to acquire capital injection from Taiwan Display Inc., the local subsidiary of Japan Display Inc. (JDI), a joint venture formed in 2012 Innovation Network, Sony, Toshiba, and Hitachi of Japan.

Star World is scheduled to propose the capital-injection plan at its interim shareholder meeting in late April, and complete the private fund raising by the end of June.

Industry sources recently also pointed out that after years of business deployments, Giantplus has been supplying automotive panels to  Japanese, Korean and American carmakers, showing the company's efforts in integrating its automotive-application panel team have paid off.

Some institutional investors said that demand for both automotive and industrial panels are stable in volume, which is expected to elevate Giantplus' automotive-panel shipments by over 30% in the next three to four years.  This year, Giantplus said, its automotive-panel team will see staff size rise to about 20.