Innolux and AUO cut LCD capacity as Taiwan panel share heads lower through 2028

Taiwanese producers retreat from mature LCD capacity

Innolux and AUO are accelerating the restructuring of their display manufacturing assets, potentially changing supply conditions for television, monitor and laptop panels through 2028. Citing TrendForce, Romanian technology publication go4it.ro reports that the Taiwanese companies are closing, selling or repurposing older production lines while directing resources toward OLED, Micro LED and advanced semiconductor packaging.

TrendForce expects the companies’ combined share of the LCD monitor-panel market to fall below 10% by 2028. Their share of laptop LCD panels is projected at approximately 20%, while their position in television LCD panels is expected to remain more resilient at about 22%. The television segment continues to offer attractive profit margins, making a sharper withdrawal less compelling.

Fab closures accompany a shift toward OLED and packaging

Innolux plans to halt operations at Fab 3 between the end of 2027 and 2028. The facility mainly manufactures laptop LCD panels, a category facing pressure as producers expand generation 8.6 OLED capacity and more computer brands adopt OLED screens. TrendForce expects OLED penetration in laptops to accelerate, increasing the surplus of conventional notebook LCD panels and making closures of highly specialized lines more likely.

Fab 3 could instead become a center for advanced chip packaging and higher-value applications. Innolux is already developing Fan-Out Panel-Level Packaging, Co-Packaged Optics and Through-Glass Via technologies. The possible conversion illustrates how established panel-making infrastructure and expertise may be redirected toward semiconductor and optical integration rather than abandoned entirely.

AUO is likewise moving investment toward Micro LED, artificial-intelligence-based solutions and advanced Co-Packaged Optics packaging. The company recently announced the sale of its Hwa Ya plant in Taoyuan to Quanta Computer and its C5E facility in Kaohsiung to ASE Technology. The L3D and L5D lines at Hwa Ya are scheduled to close in the first half of 2027, with production transferred to other facilities.

Chinese suppliers gain weight as global LCD supply tightens

The market is watching whether AUO will also sell older lines including L5C or L6A. TrendForce says such disposals could reduce AUO’s financial pressure and help rebalance supply and demand in laptop panels. If L6A closes, global supply of LCD monitor panels could decline by nearly five million units. Meanwhile, the three largest Chinese manufacturers are expected to control approximately 74% of global monitor-panel supply in 2026, increasing buyer dependence on a smaller group of suppliers.

Television-panel supply is following a different path. Limited investment in major new factories and the industry’s preference for larger screen sizes are expected to keep available capacity relatively constrained between 2026 and 2030. If AUO also gives up the L7A plant, global production area for television LCD panels could fall by approximately 2.1%. LG Display is separately reducing LCD output in favor of OLED, reinforcing a broader retreat from mature capacity even as LCD remains central to mass-market televisions and monitors.