AUO sales lifted by rising China demand

An increase in its shipments of large display panels indicated robust global TV demand, which boosted the company's overall panel sales, as TV displays remained AUO's major revenue source, they said.

AUO reported a day earlier that it posted NT$43.55 billion in sales for August, up 12 percent from July and up 15.5 percent from August last year.

The month's shipments of large flat panels — which refer to 10 inches and larger — rose 7.1 percent from July to more than 9.91 million units, while shipments of small and medium sized panels increased 4.9 percent from the previous month to some 18.15 million units.

“The higher August sales largely reflected the effect of the upcoming extended holiday in China around the country's Oct. 1 National Day,” Taiwan International Securities analyst Eric Yu said.

Chinese consumers tend to go on buying sprees ahead of the so called “Ten-One” long holiday, purchasing a wide range of electronics products, so distributors need to build up inventories prior to the holiday to meet demand.

“China is one of AUO's main buyers. As demand in the Chinese market has started to pick up, it is no surprise that AUO witnessed a reversal of July's downturn,” Yu said.

Despite the sales recovery, Yu expressed concern that flat panel prices will continue to fall amid fierce competition from oversupply.

He predicted that AUO's gross margin will fall to 12 percent in the third quarter of this year, from 15 percent recorded in the second quarter.

Meanwhile, Henry Wang, an analyst with WitsView, a Taiwan-based research institute, said seasonal factors were behind the higher August sales data.

Wang said TV demand remained strong, while demand for information technology products was on the decline, adding that “TV displays have served as a driver for AUO's sales growth.”

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