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Innolux production base hit by earthquake


A powerful earthquake measuring 6.4 shook southern Taiwan, the main production base of LCD panel maker Innolux. The company stated that after the quake hit at 4:00am on February 6, all workers were immediately evacuated at its plants in Tainan, Taiwan. Although two of its employees were hit by fallen objects, there were no major injuries.

As for the production lines, the system automatically shut down all equipment and one of its engine rooms had a small fire, but the fire was put out by 6:00am. Innolux stressed that currently the plant production lines are gradually resuming normal flow, and that its plants in Hsinchu were not affected by the earthquake.

Because the system automatically shut down, Innolux will need to evaluate the semi-finished products and scraps, so the current loss total remains unclear. The company did note that everything is insured so there was little worry about any financial loss due to the damage, but as far as the impact of output, the situation would become more clear once it takes an inventory of the situation.

However, some market watchers have voiced concerns since the company's production base is in southern Taiwan. Innolux has five LCD panel fabs (Fab A, B, C, D, F) and three touch fabs located at the Southern Taiwan Science Park, while having three fabs (Fab T1, T2, T3) at the Hsinchu Science Park. The company is also in the process of developing an LTPS fab with Hon Hai in southern Taiwan.

The market watchers are concerned that the earthquake's impact could further damage Innolux's revenue performance in the first quarter.

Digitimes previously cited Innolux president Wang Jyh-chau as stating that the company expects its shipments and average selling price (ASP) in the first quarter of 2016 to drop sequentially and that the company will see continued operating losses for its corresponding business operations.

The total area of large-size panels to be shipped in the first quarter of 2016 is expected to shrink nearly 10% on quarter and the corresponding ASP to fall 5-8%, while that of small- to medium-size panels will slip 15-20% but the corresponding ASP will remain unchanged, Wang said.

Market watchers previously estimated that Innolux's first quarter revenues will drop 10-15%, due to decreased shipments coupled with a decline in capacity utilization.

Rebecca Kuo, Taipei; Joseph Tsai, DIGITIMES [Saturday 6 February 2016]

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