Under an asset-light strategy, Taiwanese panel makers are actively pivoting into advanced semiconductor packaging and optical communications.

2026/05/22

TechNews Report

May 13, 2026
Author: TechNews

According to TrendForce's latest display industry research, with Chinese panel manufacturers controlling half of the market in recent years, Korean manufacturers have shifted most of their resources to the AMOLED panel field, while Japanese manufacturers have almost withdrawn from the traditional display field, turning to other niche markets. Taiwanese panel manufacturers are actively developing in the fields of semiconductors, optical communications, advanced packaging, and automotive system integration, but in the short term, they still need to rely on traditional display businesses to support revenue and cash flow. Whether the proportion of non-display businesses can continue to grow to 50% or even 70% or more in the next two to three years, along with the implementation of an asset-light strategy, will be key to the success of Taiwanese manufacturers' transformation.

AU Optronics (AUO) has been actively developing Micro LED technology and solutions such as smart glasses in recent years, and has also extended related technologies to the optical communications field, hoping to seize the "light-to-everything" market opportunity. Its Q1 2026 financial report shows that AUO's non-display business revenue has reached 51%, and coupled with its continued asset-light strategy, its overall transformation path is clear. Innolux Inc. delivered impressive financial results in the traditionally slow first quarter, with revenue increasing by 17.5% quarter-on-quarter to NT$66.6 billion. The company also turned a profit, with an operating profit margin improving to 2.3%, and non-display business accounting for 44% of revenue. Innolux's traditional display business benefited from improved shipments and profitability driven by early market stockpiling, and its proactive transformation strategy is progressing steadily.

In recent years, in addition to continuing to support revenue through its core business, Innolux has focused on two main areas in its non-display businesses: automotive and advanced semiconductor packaging. It has actively streamlined operations, revitalized assets, and generated revenue from non-display businesses by closing idle and outdated capacity or selling off factories.

Looking at Innolux's advanced semiconductor packaging business, this year it achieved a milestone by entering the supply chain of a leading US aerospace satellite manufacturer with its chip-first process. The next stage focuses on RDL-first process verification and continued development of the TGV process, deepening its participation in the AI and high-performance computing (HPC) supply chain.

From the perspective of RDL-first processes, Innolux can leverage the large-area metal wiring advantage of its existing panel production lines to specialize in high-precision RDL circuit layers, then outsource subsequent chip packaging to leading packaging and testing companies, achieving a highly strategic division of labor with packaging and testing companies. Its strategy for TGV technology focuses on longer-term development. Innolux, with its mastery of glass substrate characteristics, is deepening its glass processing technology, aligning with the trend of "from round to square" in semiconductor packaging area expansion, aiming to become a key supplier of glass substrates in future packaging processes.

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