AUO Earnings Call: Peter P.C. Peng: Q3 Consumer Electronics Demand Remains Weak, Automotive and Vertical Fields Stable

Taiwan-based panel giant AUO (2409-TW) held its earnings call today (30th). Chairman Peter P.C. Peng stated that due to persistently weak customer demand in consumer electronics, display technology revenue is expected to decline slightly quarter-on-quarter in Q3. In contrast, the smart mobility segment aims for stability, while vertical fields are projected to achieve low single-digit percentage growth quarter-on-quarter. Peng reiterated the company's goal to increase the combined revenue share of smart mobility and vertical fields to 70% by 2030.

Regarding display technology, Peng noted that while early TV shipments driven by the FIFA World Cup boosted first-half demand, there remains inventory replenishment demand ahead of year-end sales seasons in Q3. However, IT products, especially laptops, continue to face weak demand due to component shortages in processors and memory. As a result, display technology performance is expected to slightly decline in Q3. Nevertheless, with production aligned to actual demand, the overall supply-demand balance remains healthy.

For smart mobility, Peng acknowledged weak demand due to the European summer holidays and a sluggish Chinese auto market but emphasized efforts to maintain stable Q3 performance. The integration benefits from BHTC continue to materialize, securing numerous HMI (Human-Machine Interface) orders from European and American clients. Production expansion in Mexico is underway to meet growing demand. Additionally, AUO has achieved a 50% market share in smart cockpit HMIs for commercial vehicles in China and plans to aggressively expand into overseas markets. The company remains optimistic about solid growth in smart mobility over the next 2–3 years.

In vertical fields, Peng reported steady growth across industrial control, medical, retail, and commercial panels, with strong demand also seen in green energy solutions. Revenue in vertical fields is expected to achieve low single-digit percentage growth quarter-on-quarter in Q3. In Q2, the combined revenue share of smart mobility and vertical fields reached 48%, matching that of display technology. The company reaffirmed its target to achieve a 70% combined revenue share from these two segments by 2030.

On the market-watched CPO (Co-Packaged Optics) front, Peng stated that AUO is leveraging its group-wide technological capabilities—including Micro LED mass transfer, RDL routing, and heterogeneous integration—to develop system-level CPO light source modules targeting high bandwidth and low power consumption. The company is currently collaborating with AI interconnect solution providers on development, though commercial maturity is expected in 2–3 years.

Peng also highlighted the expanding commercialization of Micro LED, which is now being adopted not only in high-end smartwatches and vertical applications but also in automotive displays, with volume production targeted for 2028. Demand for seamless large-format displays in applications such as digital signage, meeting rooms, and command centers remains positive. The company expressed optimism about Micro LED's growth trajectory in 2024.