Innolux Sells 5.5G Factory in Tainan, Continuing Its Path Toward Transformation

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On August 15, TSMC officially announced the acquisition of Innolux’s 5.5G manufacturing facility in Tainan, Taiwan, for NT$17.14 billion. TrendForce reveals that Taiwanese panel makers will still operate several smaller-generation production lines, which are historically used for IT panels and mid-to-small-sized displays. However, as competitors continue to expand their large-generation production capacities, it has become increasingly difficult for these smaller lines to compete. This challenge has prompted Taiwanese panel makers to pursue transformation strategies in recent years.

TrendForce notes that after Innolux closed its 5.5G line at the end of 2023, the company began actively exploring opportunities for transformation. Ultimately, Innolux decided to sell the facility to TSMC, which plans to use it to expand its advanced packaging capacity. This transaction is mutually beneficial: for Innolux, selling the idle facility generates non-operating income; for TSMC, acquiring an existing facility helps expedite the expansion of its advanced packaging capacity and alleviates capacity constraints.

TrendForce highlights that the Tainan 5.5G line represented roughly 10% of Innolux’s original capacity, signaling a continued contraction in its TFT-LCD business as the company accelerates its transformation. In recent years, Innolux has leveraged its smaller-generation lines to develop niche applications beyond displays, such as panel-level fan-out packaging and X-ray sensors, and has been actively expanding into system integration markets, such as automotive displays. The much-anticipated panel-level fan-out packaging technology, after years of development, is expected to yield initial results, helping Innolux diversify its business from displays to other fields through its core technological capabilities.

TrendForce also points out that Innolux’s closure of its 5.5G capacity at the end of 2023 represented about 1% of global LCD panel capacity. In 2024, Sharp is expected to close its Sakai 10G plant, which is projected to impact overall capacity by around 2% in 2025. Additionally, LGD plans to sell its Guangzhou 8.5G plant to a Chinese panel maker, which could increase China’s share of global panel production capacity from 68% in 2024 to 71% in 2025. This shift will further concentrate global panel production, with Chinese panel makers gaining an increasingly dominant position in the TFT-LCD sector, thereby expanding their influence on the global display industry.