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Hon Hai and Innolux capture large order of TVs for Mexico

TAIPEI, Taiwan -- Reports yesterday indicated that Hon Hai Precision Industry Co. (鴻海) and its display panel maker affiliate Innolux Co. (群創) has captured a considerable order of TV sets from Mexico, boosting the two companies' revenue prospects.

Hon Hai, the largest electronics contract manufacturer in the world, is poised to assemble 2 million to 3 million 23.6-inch TV sets equipped with display panels supplied by Innolux before the end of this year. The high volume of TV orders is a result of the Mexican government's efforts to encourage the public to adopt newer and more energy-efficient LCD-display TV sets through a bulk purchase by the state, which will be then be distributed among consumers through a subsidized pricing scheme, according to reports.

Sources close to the companies stated that the Mexican government procurement deal reaches about 7 million TV sets to be delivered over the next three years. The two companies are expected to ship as much as 2 million to 3 million units in the first installment before the end of this year. Reports indicate that mass production at Innolux commenced in June and will continue to ramp up rapidly throughout the third quarter. In addition, production at Innolux is approaching the capacity limit of its fifth-generation panel plants, and the company has been diverting additional manufacturing lines from its 8.5-generation facilities.

Production Capacity Tightens

Industry research institute DisplaySearch stated that production capacity throughout the display panel sector is expected to experience strain amid high shipping volume targets in anticipation of the post-Thanksgiving Black Friday shopping spree in the U.S. market. DisplaySearch analysts stated that a number of brand names including Vizio, Element and Emerson are expected to promote large-sized 50-inch, 60-inch and 65-inch TVs aggressively during the Black Friday sales drive. As a result, TV display panels sized 50-inch and under surged by about 1 to 2 percent, while the price of panels sized 50-inch and above have been rebounding from a recent slump, said DisplaySearch. As manufacturers divert production capacity toward TVs and mobile devices, strain on the supply of desktop and laptop computer display panels is expected to be exacerbated, propeling a 1 to 2 percent rise in price, said DisplaySearch, adding that throughout last year, manufacturers have allocated all but 30 percent of fifth-generation production capacity toward mobile devices in place of mobile devices.

Meanwhile, reports from China suggest that the iPhone 6 handset may become the first product to utilize extensive robotics manufacturing technology at Hon Hai. Dubbed the “Foxbot,” Hon Hai's manufacturing robots are rumored to cost between US$20,000 and US$25,000 per unit, with each capable of assembling up to 30,000 iPhone 6 handsets. The company is rumored to have deployed 10,000 Foxbots at its production facilities. The company had reportedly declined procurement offers for the Foxbot, citing current production capacity restraints.

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