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2022.05.23News

Innolux and AUO merge?Industry estimates that mergers will face greater burden

Hon Hai's fading out of the Innolux board of directors has sparked market speculation, and even speculation about the merger of the two panel giants, but the supply chain believes that the best time to merge has long been missed, and in terms of market share, technological complementarity and transformation, the synergy of the merger is limited. Not very likely.

In the past, the issue of the merger of the two tigers on the panel has been brought to the table for discussion many times. The purpose of the merger is to achieve the effect of 1+1 greater than 2 and gain new advantages in the market. Industry insiders believe that the merger of the two companies may help to gain the dominance of panel prices, but considering that new investment has slowed down at this stage, and Chinese manufacturers are actively expanding, if they do merge, the combined production capacity will not be able to shake the market.

In addition, the LCD market has long been dominated by mainland competitors, and AUO and Innolux have different business strategies. The merger may bring greater burdens to both parties.

AUO continues to promote "two-axis transformation", investing more resources in high-end, commercial, and highly customized products, such as deep cultivation of differentiated products such as Micro LED displays, to reduce the impact from changes in consumer market demand, and to simultaneously expand production capacity . In terms of production capacity, since AUO's production capacity in the LCD market is smaller than other peers, it instead focuses on high-end IT panels, which means that it has greater flexibility in production capacity transformation than other factories. If the two companies merge, adding Innolux's old production capacity, it will be a burden for AUO.

As for Innolux's future operation, the three major axes are technology upgrade, field construction and new business. There is no plan to expand the factory this year. The panel will continue to improve on the existing basis, including investing in Mini LED and Micro LED, and cooperating with the development of production lines. out of the upgrade. Some people in the industry bluntly stated that Innolux has lagged behind its competitors in the development of panel technology in recent years, and its production capacity has also been surpassed by BOE and TCL Huaxing. Despite the market uproar caused by Hon Hai's fading out, it is also positive for Innolux. In the past, Innolux was limited by its status as a key component factory under the Hon Hai Group, and its business direction must be based on the perspective of system integration. Due to the shackles of sea-based and vertical integration, Innolux can redefine its strategy based on the "panel factory" standard, and has more room for the use of funds and resources than before, which may bring more benefits to the development of Innolux. some opportunities.

As for the two tigers investing in Fucai at the same time, may they prepare for a "horizontal merger"? In fact, from the current strategies of AUO and Innolux, we can see that Micro LED, as an important next-generation display technology, cannot be absent from Taiwan factories. As for the most critical chip of Micro LED, from the perspective of current LED chip manufacturers in Taiwan, it is undoubtedly the most pragmatic decision for panel manufacturers to cooperate with Fucai, which has already achieved results and has both quality and quantity.

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