Innolux to Cut Capital by 12%, Accelerate Restructuring Amid Losses

Taiwanese display maker Innolux plans 12% capital reduction, shifts focus to smart healthcare and IC packaging amid 8 quarters of losses, but expects panel shipment growth in Q2 2024.

author-image
Trim Correspondents
Updated On
New Update
Innolux to Cut Capital by 12%, Accelerate Restructuring Amid Losses

Innolux to Cut Capital by 12%, Accelerate Restructuring Amid Losses

Innolux Corp., a major Taiwanese flat-panel maker, has announced plans to reduce its paid-in capital by 12% in an effort to increase shareholder payouts and speed up its business restructuring. The company aims to shift focus to smart healthcare and IC packaging and testing services following eight consecutive quarters of net losses.

The capital reduction plan will cut Innolux's paid-in capital by more than NT$10.89 billion (US$334 million). If approved, shareholders will receive about NT$1.2 per share. This marks the third straight year that Innolux has lowered its paid-in capital.

Innolux is undergoing a transformation, dividing its business into two main divisions: 'Display Domain' and 'Non-display Domain'. While continuing to improve its screen product portfolio, the company is also expanding into new growth areas such as smart healthcare and IC packaging and testing services.

The company reported a net loss of NT$4.1 billion in the first quarter of 2024, extending its streak of quarterly losses to eight. Despite the challenges, Innolux expects panel shipments to grow 11-13% in the second quarter, driven by increased demand for TV screens due to upcoming sports events and China's shopping spree.

Why this matters: Innolux's restructuring efforts and capital reduction plan highlight the challenges faced by display panel manufacturers in a highly competitive and rapidly evolving industry. The company's move to diversify its business into smart healthcare and IC packaging and testing services reflects a broader trend among tech firms seeking new growth opportunities beyond their traditional markets.

Innolux's decision to reduce its paid-in capital for the third consecutive year emphasizes the financial pressures the company has been facing, with eight straight quarters of net losses. However, the expected growth in panel shipments for the second quarter of 2024, driven by increased TV screen demand, offers a glimmer of hope for the company's display business. As Innolux navigates this transitional period, its ability to successfully execute its restructuring plan and tap into new growth areas will be critical to its long-term viability and competitiveness in the global tech industry.

Key Takeaways

  • Innolux to reduce paid-in capital by 12% to increase shareholder payouts and restructure.
  • Innolux shifting focus to smart healthcare and IC packaging/testing services after 8 quarters of losses.
  • Innolux expects 11-13% growth in panel shipments in Q2 2024 due to increased TV demand.
  • Innolux's restructuring reflects challenges faced by display panel makers in a competitive industry.
  • Innolux's ability to execute its restructuring plan and tap new growth areas is critical to its future.