Innolux to hike prices for some niche products amid material cost increases

Innolux Corp (群創) is hiking prices for certain niche products to reflect material cost increases amid geopolitical conflicts and chip crunches, it said yesterday.The war in the Middle East has prompted price jumps for a wide range of key components and materials such as copper, indium and printed circuit boards, on top of the price surges in memory chips and central processing units earlier this year due to supply constraints.“In terms of niche products, we are able to pass on the increase in material costs to customers,” Innolux president Jeffrey Yang (楊弘文) said. “For consumer electronics-related products, we are feeling greater pressure, as there is no way to mitigate the cost increases.”Flat-panel displays used in industrial devices fall into the category of niche products, which are usually tailored to meet certain requirements and are produced at a relatively small scale, while displays used in consumer electronics such as notebook computers and smartphones, are commodity products and would feel the pinch this year, the company said.Innolux has been stepping up efforts to overhaul its cost structure and engage with new suppliers since late last year. Such efforts are expected to prop up gross margin in the first two quarters of this year, Innolux chairman Jim Hung (洪進揚) said. Gross margin improved to 9.08 percent in the final quarter of last year, from the previous quarter’s 8 percent, company data showed.Innolux is optimistic about its financial performance in the first half of this year, thanks to customers’ pull-in demand, attributable to the war effect and the FIFA World Cup, Hung said. “Based on the orders we received, the situation is better than imagined,” he said. However, the visibility for the second half remains vague, he added.Strong demand for Innolux’s fan-out panel-level-packaging products pushed its equipment utilization rate to 100 percent last year, and the company plans to add more capacity this year by improving manufacturing equipment efficiency, Hung said.Innolux has been working to diversify its business portfolio beyond boom-and-bust display products in the past few years, with non-display businesses accounting for 51 percent of its total revenue last year.Its domestic rival, AUO Corp (友達), has also expanded into different industries and leverages its strength in micro LED technology, advanced packaging technology and co-packaged optics.AUO is in talks with customers about volume production for its micro LED-based optical modules, company chief executive officer Frank Ko (柯富仁) said yesterday.Its optical modules can cut power consumption for data transmission between artificial intelligence server racks compared with copper cables, the company said.AUO’s glass-based satellite antennas, which enable smart vehicles to constantly connect to the Internet, have attracted strong interest from automakers since it demonstrated the products during the annual CES in Las Vegas in January.The company aims to boost non-display revenue contribution to half of its total revenue this year, compared with 46 percent in the fourth quarter last year.