AUO Head Explains Reasons Behind Panel Price Downturn

AU Optronics Corp. (2409-TW) Chairman Paul Peng responded on Tuesday (May. 24) to a recent decline in panel prices, saying that prices are determined by the interaction of supply and demand in a market.

Peng, also chairman of the Taipei Computer Association, remarked that weak demand for consumer products also impacts prices, estimating that operation in May and June will improve compared to April in response to the lifting of restrictions.

In light of the recent decline in panel prices, which are close to cash costs, Peng expects panel prices to fluctuate in a positive direction after customer inventories return to healthy levels. As supply and demand still determine prices, he lamented that too many low-end products are on the market.

In response to these challenges, AUO has laid out mid-range and customized products to increase the proportion of commercial. Under this two-axis transformation strategy, AUO’s operation will be less affected by the general environment than the industry, he added.

Looking ahead, Peng said that there are many uncertainties this year. Every week there are changes, a significant challenge to the operation, he continued.

The war in Russia and Ukraine has led to inflationary pressure on raw materials and oil and food prices since the beginning of the year, and China’s lockdowns have depressed the overall consumer market momentum.
Zero car sales in Shanghai in April shows the impact on consumer spending and logistics is not yet thoroughly relieved, he added.

As to whether AUO will revise its Q2 outlook, Peng said the second quarter was mainly affected by lockdowns in eastern China in April, which led to production, material, logistics and personnel disruptions. The downstream assembly plants were also affected by the restrictions.

However, the overall supply chain is now recovering, so AUO will continue to monitor the situation closely. He explained that May and June will be better than April at this stage.

Peng further pointed out that the previously mentioned cartons and tapes are not production problems but transportation problems; after the gradual resumption of work, the biggest problem is the lack of truck drivers.

Because the local government requires daily nucleic acid testing, the driver’s daily transport capacity has dropped significantly, from the past five trips per day to only one run.

Looking at the general environment, Peng said that demand for consumer products such as TVs, cell phones and computers has been feeble recently.

The decline in panel demand will also drag down the demand for driver ICs and impact the demand for semiconductors, even though the demand for commercial and electric vehicles is still relatively strong, he added.