HannStar Display Expects Q4 Turnaround, Bullish on Automotive Products

(CNA, Taipei, May 20, by reporter Pan Chih-yi) Panel manufacturer HannStar Display's General Manager, Chen Sheng-chung, stated today that although the second half of the year still faces inflationary pressures and the ongoing impact of the Middle East war, efforts to reduce costs will lead to a turnaround by the fourth quarter or next year. HannStar held its shareholders' meeting today, after which Chen said in an interview that previous losses were mainly due to a surge in memory prices, poor pricing for consumer products, and capital expenditure on production line expansion during the pandemic, which is still being accounted for as "depreciation and amortization" on financial statements, affecting profitability. He expects this year's overall operational performance to be comparable to the first quarter. Chen pointed out that the revenue share of automotive products is expected to reach about 30% this year, with industrial control products at 30% to 35%, totaling about 60% for both. Consumer products, heavily affected by memory prices, have high costs but poor pricing, and the company hopes to reduce their revenue share to below 20%. He stated that the current capacity utilization rate is about 80%. While industrial control products have good profit margins, they are highly customized and difficult to manage in small, diverse batches. The automotive business is more stable, and he hopes its revenue share can potentially reach over 60% in the future. He explained that automotive product certification generally takes two years, targeting international clients. The automotive market has stable demand and high visibility, making it suitable for production at a 5.3-generation panel fab, primarily for products 10.25 inches and smaller, including 7-inch and 4.2-inch models. Furthermore, HannStar's eye-protection products are scheduled for mass production in the second half of the year, mainly for European customers. The mobile phone panels produced use natural light reflection technology, allowing users to view the screen in sunlight. The current yield for these eye-protection products is 85% to 90%. They are primarily used in e-readers and tablets, and the company will expand cooperation with its own brand and major international firms. In April this year, HannStar announced the disposal of its plant and ancillary facilities at the Southern Taiwan Science Park, with an expected disposal gain of approximately NT$2.16 billion. Chen noted that while the experience of major panel makers AUO and Innolux in boosting profits by selling plants can be a reference, HannStar will retain its factory to supply automotive display panels and maintain stable operations, even expanding the capacity of its Nanjing panel module plant by 20%. Chen stated that the company's transformation is imperative. However, automotive products will continue to be produced and will become the most significant operational item, with energy-saving products also being a key focus. As for whether there will be transformations outside the display panel industry, or even unexpected ones, there are no concrete conclusions at present. (Editor: Chang Liang-chih)