Ennostar, a Taiwanese group focusing on the R&D and manufacturing of Micro LED, LED and compound semiconductor, has announced on January 19th a NTD 670 million (roughly USD 21.36 million) sale of the planned Micro LED production facility in Zhunan, Taiwan.

Its subsidiary, EPISTAR, is anticipated to expedite Micro LED development by integrating existing resources in alternative locations.

According to TechNews’ report, Chin-Yung Fan, chairman of EPISTAR, anticipates “symbolic revenue” from Micro LED starting this year. He notes that in 2021, with the rise of Micro LED and Mini LED, existing facilities were insufficient. While planning to build new facilities based on customer demand and market predictions, the pandemic delayed many new technologies.

Following the integration of Ennostar’s factory resources, which are now available for EPISTAR’s use, the decision has been made to sell the Zhunan facility.

During an earnings call in 2023, Ennostar mentioned that the initial capacity demand for Micro LED is still low. Consequently, the company has slightly postponed its plans for new production capacity and will closely monitor the actual market demand.

Fan also emphasized that the volume of Micro LED will undoubtedly increase, and the significant symbolic revenue is expected around 2027, given the longer evaluation time for Micro LED in automotive applications.

However, the sale of Ennostar’s factory also highlights the delayed mass production of Micro LED. Currently, Micro LED is primarily used in large display products like TVs and small displays for smartwatches.

AUO, a Taiwanese company that specializes in optoelectronic solutions, commenced Micro LED production at the end of last year, supplying to high-end smartwatch clients, expected to achieve cost efficiency.

As for Samsung and LG, they view Micro LED TVs as a core market, aiming to enhance profitability through positioning them as high-end television options. At CES 2024, Samsung showcased a transparent Micro LED screen, reaffirming the potential of Micro LED as the next-generation display technology. However, due to the high unit price, mass adoption in the consumer market is currently limited.

Furthermore, despite being a key industry influencer, Apple has not yet integrated Micro LED into its product roadmap. Notably, the Vision Pro, currently available for pre-orders, opts for Micro OLED instead, signaling that the practical implementation of Micro LED in products may still be some time away.

Although it will take some time for mass production to ramp up, Taiwanese manufacturers are actively laying the groundwork for Micro LED technology. Major Micro LED manufacturers, such as PlayNitride, have signed production line construction contracts with EPISTAR and AUO.

EPISTAR has completed construction by the end of last year, while AUO is expected to have production capacity by the end of next year. Both AUO and Innolux, under the umbrella of the CarUX initiative, showcased Micro LED automotive technology at this year’s CES.

Innolux has also purchased a significant amount of transfer equipment from PlayNitride, further enhancing the completeness of the Taiwanese Micro LED supply chain.

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(Photo credit: AUO)

China’s top panel makers, including BOE, TCL CSOT, HKC, and CEC-CHOT, are cutting production to support TV panel prices. Speculations indicate a capacity utilization drop below 60% in the first quarter, benefiting Taiwanese panel companies like Innolux and AUO. Despite these efforts, industry sources caution of a panel industry slowdown due to reduced demand, possibly resulting in lower TV panel prices, reported by TechNews.

The memory industry saw a big downturn due to major players like Samsung, SK Hynix, and Micron drastically reducing production. This resulted in a surge in memory prices and a gradual recovery for the entire memory industry. Panel makers may adopt a similar strategy to boost the overall panel industry as well.

Chinese panel companies currently command a global market share of over 70% in TFT-LCD, with the world’s top 3 LCD panel makers from China: BOE, TCL CSOT, and HKC. As China holds the largest share of panel production capacity, a reduction in production by major players could have a more substantial impact on the panel industry compared to the effects on the memory industry caused by Samsung, Micron, and others.

According to TrendForce’s report in November, BOE began adjusting its production levels in the Q3 and will continue to do so in Q4, with an estimated decrease of 7 percentage points in utilization rates. CSOT, on the other hand, maintained high utilization rates in Q3, supported by major customer stockpiling and the ramp-up of the T9 new production line. However, due to reduced procurement of TV panels by both in-house group brands and international frontline brands, CSOT’s utilization rate is expected to decrease by about 17 percentage points to 76% in Q4.

HKC, which still has two production lines not running at full capacity, anticipates a 14 percentage point decrease in its utilization rates for Q4. This is primarily due to the need to reduce production of one of its main products, the 32-inch TV panel, to alleviate inventory pressures and avoid significant price drops.

In response to this, both Innolux and AUO express their intention to dynamically adjust production capacity utilization in line with market conditions. This strategic flexibility is aimed at fostering a more robust and balanced industry order.

Overall, most panel makers are adopting a more conservative approach to production for 1Q24. Furthermore, several panel makers have indicated a two-week Lunar New Year shutdown for 2024. As a result, TrendForce anticipates that overall Gen5+ LCD panel utilization rates may be revised down to 70% or lower in 1Q24 to maintain the market supply-demand balance.

(Image: BOE)

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According to TechNews’ report, due to ongoing technology infringement disputes and the uncertainty in the tense relations between China and the United States, Samsung Electronics is cutting ties with the leading Chinese display supplier BOE. They are restructuring their supply chain, and other panel manufacturers such as AU Optronics (AUO), Sharp, and LG Display (LGD) are expected to benefit.

According to the Korean media outlet BusinessKorea’s report, industry insiders from South Korea revealed on the 15th that BOE is no longer among Samsung’s top three suppliers for TV panels in Q3, and its market share is starting to decline.

BOE accounted for approximately 10% of Samsung’s TV panel procurement in the first half of the year, originally ranking third among major panel suppliers.。

From the Q3 financial report, it is evident that Samsung has removed BOE from the main supplier list for TV and display screen device panels in the Device Experience (DX) division. This marks the first time since Q4 2015. Analysts believe that Samsung aims to restructure its partner relationships, focusing on domestic enterprises.

Samsung Electronics is planning to sever its medium to long-term partnership with BOE, primarily due to a patent infringement lawsuit involving its subsidiary Samsung Display (SDC) and BOE.

Insiders have revealed that collaboration between Samsung and BOE in the mobile phone panel sector has already ended. As for TV panels, the relationship has become tense due to significant cost pressure on Samsung caused by the panel manufacturer aggressively raising TV panel prices.

South Korean industry insiders anticipate that Samsung will increase collaboration with other suppliers, including LGD, Sharp, and AUO. Industry experts suggest that for next year’s TV panel procurement allocation, Samsung intends to increase the proportion of panels sourced from Japanese, Taiwanese, and South Korean manufacturers.

However, considering the significant production capacity of Chinese panel manufacturers and their production advantages in certain sizes, Samsung does not plan to completely sever cooperation.

Currently, Chinese panel manufacturers maintain an absolute advantage in global production capacity and are working to mend customer relationships. Besides, AUO’s TV panel production capacity may not be able to fully meet customer demands.

Reportedly, in preparation for the supply chain restructuring, LGD plans to increase the utilization rate of its LCD plant in Guangzhou, China, raising shipments from 9 million units this year to 16 million units next year.

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(Photo credit: AUO)

According to TechNews’ report, during its Q3 financial briefing, AU Optronics (AUO) revealed that its automotive panel revenue has surpassed 3.3 billion NTD, with expectations to exceed 4 billion NTD for the year. This signifies a growth rate of over 20%, highlighting AUO’s robust presence in the automotive panel market.

Notably, AUO has officially started shipping Human-Machine Interface (HMI) panels, accounting for over 10% of its automotive panel revenue. With strong long-term order visibility, it is anticipated that HMI Display will constitute over 40% of the automotive panel revenue by 2025, demonstrating AUO’s shift from pure automotive panels to HMI solutions. The company estimates that automotive products will contribute to 20-25% of its total revenue.

In the automotive sector, AUO has invested in intelligent cockpit solutions from companies like Adlink, Sintrones, Carota, and Cruise10. However, it currently lacks Tier1 partners in its ecosystem. The acquisition of BHTC, a German automotive supplier, is expected to enhance AUO’s global automotive footprint.

Regarding display sales, AUO noted a 2% decline in TV panel sales during Q3, but with an increase in average panel size to 50 inches, resulting in larger shipment areas. The market has adjusted to a stable state, with the best performance seen in the U.S. market, demonstrating 30% year-on-year growth.

Emerging markets, especially India, continue to show growth, while the Chinese 618 promotion was relatively subdued. Although shipment volumes have slowed, strong sales of larger panels, especially with numerous promotional events towards the year-end are expected to drive a new wave of demand.

Looking forward to next year, AUO maintains an optimistic stance, as it believes that inventory corrections are gradually stabilizing. Additionally, with the anticipation of three major events in 2024 and clients expressing their optimism, AUO is confident in expecting substantial growth for the upcoming year.

Regarding the IT panel sector, the back-to-school programs in the third quarter contributed to a portion of the demand. Customers actively prepared in the transition from the second quarter to the third quarter.

Presently, there is a visible trend of overall sales stabilizing, approaching a level close to the previous year. AUO anticipates that the fourth quarter may witness a positive year-on-year growth situation, as sales in the IT industry return to a normal trajectory. The fourth quarter is expected to yield satisfactory sales.

Looking ahead to the following year, many customers are optimistically gearing up for AI PCs, in addition to Windows system transformation requirements. If the fourth quarter sees stable demand and new products continue to captivate consumers, AUO holds a relatively optimistic outlook for the upcoming year.

AUO estimates that their total capital expenditure for the full year 2023 will be revised down to approximately 30 billion NTD. In the third quarter, their capacity availability rate is at around 80%, and they predict it will slightly decrease in the fourth quarter compared to the third quarter. Capital expenditure in the third quarter amounts to 900 million NTD, and the full-year capital expenditure target for this year will be adjusted down to 30 billion NTD.

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(Photo credit: AUO)

According to Economic Daily News, industry insiders said that Vanguard International Semiconductor (VIS) is in talks to acquire land and facilities from AUO’s Singapore plant for its first 12-inch fab. The estimated investment for this project is a substantial US$2 billion. VIS is making a strategic move to specialize in producing advanced chips for the automotive industry.

AUO is scheduled to hold a conference on October 31st, and VIS will follow suit on November 7th. Both companies are currently in a pre-conference quite period and haven’t made any official comments on the recent rumors.

Per reports, AUO has been gradually relocating its equipment from its Singapore plant back to Taiwan. Following a model where AUO sold its L3B fab and related facilities in Hsinchu Science Park, Taiwan, they plan to sell this Singapore plant to VIS. Notably, this Singapore plant is conveniently located just an eight-minute drive away from TSMC’s Singapore plant (SSMC), and the transaction is estimated to be worth over a billion dollars.

The Singapore plant in question was acquired by AUO in 2010, and it specializes in the production of 4.5th generation low-temperature polycrystalline silicon (LTPS) display panels and also has some capacity for AMOLED displays. However, the land use contract for this plant expired during the pandemic. AUO then redirected the plant’s focus towards supporting display production. However, with a decrease in post-pandemic notebook demand, AUO’s strategy in Singapore shifted from manufacturing to establishing itself as a regional service center.

Recent developments show that AUO has begun a significant production line adjustment.  They’re transforming the Longtan Aspire Park in Northern Taiwan into a hub for mass-producing Micro LED technology and integrated automotive display modules. Insiders suggest that AUO’s LTPS production line in the Singapore plant has already started moving to Longtan Aspire Park, where they’re gearing up for Micro LED technology development and eventual mass production.

Regarding AUO’s Singapore plant, the company recently stated that they are conducting a thorough evaluation of the operational efficiency of their various plants worldwide. The production schedule for the Singapore plant extends until early 2024, and they’ll subsequently assess the equipment and assets. The company is in the process of discussing and evaluating the related strategies, and they haven’t made any final decisions yet. AUO’s Singapore plant employs approximately 500 people, and they are committed to following local regulations to safeguard their employees’ rights.

In an earning calls last year, Chairman of VIS, Leuh Fang, revealed that the company already operates five 8-inch fabs. Fab 5 still has the potential for increased wafer production, but due to the challenges of acquiring new 8-inch equipment, establishing a brand-new 12-inch fab in Singapore makes more sense if customer demand necessitates capacity expansion.

This development isn’t entirely surprising, as there’s a precedent for fab transactions between AUO and VIS. In late April 2021, AUO sold its L3B plant in the Hsinchu Science Park, along with its related equipment, to VIS for NT$905 million (pre-tax).
(Image: AUO)