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)

Entering the fourth quarter, demand for television panels has started to weaken steadily, prompting brand customers to request price reductions. However, from current observations, panel manufacturers are still implementing strict production rate controls, attempting to keep prices stable and minimize the possibility of price drops. Therefore, as of early October, television panel prices continue to show an overall stable trend. However, there have been recent indications of pressure on some distributors to lower prices for small-sized television panels, and whether this will lead to a loosening of prices in this segment remains to be seen.

Monitor brand customers significantly increased their inventory in the second and third quarters. Consequently, as we enter the fourth quarter, there are signs of weakening demand for monitor panels, and panel prices are no longer able to maintain the slight upward trend seen in the third quarter. Most panel manufacturers still operate at a loss in the Monitor panel product category. Therefore, it is currently anticipated that monitor panel prices in October will shift towards stability.

Notebook brand customers boosted their inventory momentum from the second quarter to the third quarter. However, as we enter the fourth quarter, and with actual demand from end-users remaining less than ideal, brand customers are showing an increasing trend in revising their panel demand downwards. Panel manufacturers are also finding it challenging to sustain the idea of pushing panel prices higher, which they had been doing over the past few months. In order to maintain customer relationships and ensure stable customer demand and orders, it is currently expected that notebook panel prices in October will also shift towards stability.

According to reports in the Indian media, India has decided to delay the implementation of import restrictions on electronic products such as laptops, tablets, and servers. This delay pushes the commencement date to November 2023. As a result, Taiwanese, American, and Chinese laptop manufacturers are now reevaluating their production strategies in India and expediting their applications for importing electronic goods.
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The latest “Automotive Display Market Analysis” from TrendForce indicates that the overall demand for automotive display panels (automotive panels) is gradually stabilizing and shows an upward trend as the automotive market as a whole slowly recovers, and promotional activities related to smart cockpits continue to expand. TrendForce estimates that the overall supply of automotive panels will maintain growth for 2023. Additionally, by 2026, TrendForce forecasts that the annual total supply of automotive panels will surpass 240 million pieces. Furthermore, as panel makers improve their OLED products in terms of performance and cost optimization, the market share of OLED in the market for automotive panels is forecasted to reach 8.9% by 2026.

The ongoing inflation has resulted in a significant decline in the demand for consumer electronics, prompting panel manufacturers to shift their focus towards automotive displays. Regarding the development of automotive panels, automobile manufacturers are now increasingly demanding greater integration in terms of design and functionality. This opens up new opportunities for panel makers to expand their presence downstream by offering system integration services. Panel makers aim to loosen the tight control that traditional Tier-1 automotive suppliers have over various automotive parts and components. Specifically, for displays used in cockpit systems, panel manufacturers are looking to establish a new kind of supply relationship with automobile manufacturers.

Automotive displays, including rear-seat entertainment screens, passenger-side displays, central information displays, and digital clusters, are evolving into more powerful communication mediums. Moreover, to integrate the various independent functions found in a traditional cockpit, larger screens and more flexible spatial designs are required. Hence, there is room for further advancements in various display technologies. For instance, pairing LCDs with a Mini LED backlight can significantly boost display brightness to over 1,000 nits, thereby improving display visibility when external conditions like snow and bright sunlight could cause interference. OLED panels, in contrast to traditional LCDs, offer notable advantages. They are self-emissive and thinner. They have a higher refresh rate and can be built on flexible substrates. These advantages can provide significant added value for automotive displays. Flexible OLED panels, in particular, allow for more innovations in vehicle design and are primarily positioned for flagship and high-end products in the automotive market.

In order to resolve the issue of durability for OLED among automotive applications, the technology is mostly adopted with Tandem OLED, which inter-concatenates and stacks multiple OLED components to form a high-efficiency OLED structure. Double-stacked OLED components require 1/2 less current density than that of single-layer variations after concatenation and are able to improve by a minimum of a twofold increase in lifespan under a much lower power consumption from panels. As for cost, Hybrid OLED panels are incorporated, where the assimilation between rigid OLED glass substrates and the thin-film packing technology used by flexible OLED would both reduce weight and cut cost, and curving effects can also be attained through thinned substrates.

TrendForce commented that a closer partnership between panel makers and automobile manufacturers is bound to be inevitable, should the former wish to expedite their market shares, seeing how automotive displays require approximately 2-3 years for testing and qualification. Subsequent to Samsung Display successively acquiring major orders from Ferrari and BMW, automotive leader LG Display has also announced to enhance its partnership with 9 luxury automotive brands by widening in incorporation of high-end automotive OLED panels, and is scheduled to mass produce its second-generation Tandem OLED, which has been vastly improved in brightness and power consumption. While LCD adopted with Mini LED BLU (Mini LED backlight technology) races to seize the automotive market through cost advantages, OLED is accelerating its entry into the high-end automotive display market by launching ultra-large, rollable, and transparent products.

TV panel prices have reached relatively high levels after nearly two-quarters of increases. Brand customers face the dual pressures of weak demand and rising procurement costs, leading to early adjustments in their purchasing strategies. Third-quarter TV panel procurement has been revised down from the previous estimated 6-7% quarterly growth to near-flat levels. Fourth-quarter demand is also expected to decrease, requiring panel manufacturers to prepare for the off-season. Panel prices are anticipated to stabilize in late September.

Monitor panel demand surged in the second quarter, but third-quarter shipments are only expected to grow by 1~2%. As we approach the fourth quarter, brand customers will feel more pressure to adjust their demand. After a few months of slight price increases, monitor panel prices are expected to stabilize across the board in September.

Notebook panel demand peaked in August of the third quarter and is expected to dip slightly in September. However, overall third-quarter shipments are set to grow slightly compared to the second quarter. Some panel manufacturers aim to maintain price increases. With major brands increasing safety stock levels or working toward year-end goals, a marginal USD 0.1 increase in notebook panel prices is expected in September.