Innolux to sign long-term supply contract for 10.5G panels from China

Rebecca Kuo, Tainan; Adam Hwang, DIGITIMES Asia 0

Innolux has disclosed it will sign a 12-year (2021-2033) contract with SDP Global (China) for the latter to supply 10.5G panels during 2021-2033, and will pay CNY4 billion (US$618 million) in installment for the deal.

Innolux said the 10.5G panels will allow the company to maintain its strong presence in the TV panel market, and a portion of the supply from SDP Global will be provided for Foshan Optoelectronics, Innolux's China-based subsidiary, to make TV-use LCD modules.

The 10.5G panels are most economical in producing 65-, 75-inch and larger TV applications, according to industry observers.

SDP Global (China) is Japan-based Sakai Display Products' (SDP) wholly-owned subsidiary in Guangzhou, China, the observers noted.

With the supply of 10.5G panels from China, Innolux will not have to spend as much as NT$200 billion (US$7.2 billion) setting up its own up a 10.5G line, and can shift its existing TV panel production capacity to making high value-added applications for medical, automotive and industrial displays, as well as aerospace and satellite instruments, said the observers.

SDP Global (China) will reportedly expand its monthly production capacity from 90,000 10.5G glass substrates at present to 120,000 and 150,000 eventually.

Innolux said it expects its total LCD panel shipments in the third quarter of 2021 and the corresponding average selling price (ASP) to both rise 1-3% sequentially.

Innolux expects global demand for large-size TV applications, and panels used in mid-range and high-end notebooks to remain strong in the third quarter. Global demand for small- to medium-sized panels used in automotive displays and smartphones will rebound in the third quarter, Innolux said.

Innolux shipped panels totaling 7.09 million square meters at ASP of US$464 per square meter in the second quarter, with the area remaining unchanged sequentially. Area shipments of 842,500 square meters for small- to medium-size applications in the second quarter grew 6.9% on quarter.

Innolux posted consolidated revenues of NT$93.236 billion (US$3.33 billion), gross margin of 33.10%, operating profit of NT$23.777 billion, net profit of NT$21.419 billion and net EPS of NT$2.09 for the second quarter, leading to consolidated revenues of NT$177.074 billion, gross margin of 29.64%, operating profit of NT$38.658 billion, net profit of NT$32.990 billion and net EPS of NT$3.22 for the first half of 2021.

Of the second-quarter 2021 revenues, 19% came from sub-10-inch panels, 30% from 10- to sub-20-inch ones, 14% from 20- to sub-30-inch ones, 7% from 30- to sub-40-inch ones, and 30% from 40-inch and above. In terms of applications, notebooks and tablets accounted for 27% of the revenues, smartphones and commercial displays for 24%, desktop monitors for 11%, and TVs for 38%.