AI-driven demand for advanced packaging is giving old-generation panel fabs and equipment new value. As Taiwan's panel makers accelerate the phaseout of LCD capacity at the 5.5 generation and below, they are splitting into two tracks: selling factories to foundries and outsourced semiconductor assembly and test (OSAT) providers, or keeping lines in-house to develop fan-out panel-level packaging (FOPLP), through-glass via (TGV), redistribution layer (RDL), and glass core technologies.

A Chinese equipment maker has sold OLED production tools directly to LG Display for the first time, a small order that gives a Chinese supplier a foothold in a production network long served by Korean equipment makers.

AUO said panel demand will come under pressure in the second half. IT channel inventories remain elevated, with notebook inventories particularly high. TV inventories, however, stay healthy, supported by the 2026 FIFA World Cup and year-end promotion campaigns.

China's leading display manufacturers are stepping up investments across both LCD and OLED technologies, targeting larger TV panels and expanding into the fast-growing notebook OLED market as they seek new growth opportunities.

The display industry is edging toward a new competitive phase as South Korea and China intensify their rivalry over next-generation OLED technologies amid growing demand for AI-enabled devices.

AUO, Taiwan's largest display panel maker, has spent recent years shifting away from consumer LCD panels toward higher-value markets such as automotive, healthcare and industrial displays. That transformation is now under intense scrutiny.