Innolux: Panels are in short supply for a whole year

After a lapse of three years, the panel factory Innolux held another lecture on the 3rd, and hundreds of legal persons and the media poured into the scene. Innolux has an optimistic view on its operations in 2021. Chairman Hong Jinyang said that the gross profit margin in the fourth quarter of last year rushed to 20.4%. With the increase in panel prices and the structural changes in the industry, there is still room for substantial growth in gross profit margin this year. General Manager Yang Zhuxiang is even more optimistic that the rigid demand for panels will remain unchanged. Coupled with the lack of supply in the supply chain, “the panel industry has been in short supply throughout this year.”

Innolux’s net profit after tax in the fourth quarter of last year was 10.143 billion yuan, of which gross profit margin even rushed to 20.4%. Hong Jinyang said that in the past, the panel was generally seen as a business cycle stock. From the previous wave of LCD cycles, the first quarter of 2016 was the bottom with a gross loss rate of 7.16%. In the second quarter of 2017, it came to 24.9%, which is lower than the high and low. The difference is 32 percentage points.

In this wave of LCD cycles, the gross loss rate was 2% in the fourth quarter of 2019, and the gross profit margin reached more than 20% in the fourth quarter of last year, an increase of 22 percentage points. In the last LCD cycle, the gross profit margin increased by 32%. In addition to the increase in panel prices, the panel industry has also undergone structural changes. The gross profit margin has gradually increased, and there is a chance to break through the previous high.

In addition, the panel industry outlook and the impact of supply chain shortages are also the focus of corporate attention. Yang Zhuxiang said that the panel industry is still in short supply throughout this year. Although the production capacity in the name exceeds the demand, the supply of key components cannot meet the demand immediately. Polarizers and various ICs are tight. In addition, there is a shortage of water and glass. The front-end investment cannot be effectively projected on the back-end demand, resulting in an imbalance between supply and demand, which is expected to last for a whole year.

Yang Zhuxiang further stated that Japan Electric Glass (NEG) and Asahi Glass (AGC), the world’s second and third largest glass substrate suppliers, have caused a 5% global glass shortage. It is estimated that the gap in the second quarter will still fall at 2.5%. The supply of glass was tight in the first half of the year.

As for ICs such as driver ICs, T-Con, TDDI, etc., because the 8-inch wafer production capacity has not increased, there are other applications that are rushing for production capacity, so they can only buy them at a higher price. In addition, the latter part of the packaging and testing is also out of stock. This year, even It may not be resolved in the first half of next year, and it will cause a 3 to 5% deferral effect on supply and demand.

On the demand side, the new crown virus has caused changes in lifestyles, and rigid demand has not fallen. The demand in the first half of the year is optimistic and the second half is cautiously optimistic. Online teaching is still a blue ocean market, and education is given priority in the relief plans of governments of various countries. Last year, 30% of the demand was not met. It will be postponed to this year. Japan and India are both extremely large markets.

Last year, Innolux discovered the importance of online teaching. Through the adjustment of equipment and production capacity, the supply of notebook panels has increased by 50%, and it has now become the world’s second largest notebook panel supplier.

Post time: Mar-08-2021