Taiwan Panel Giants to Reshape Display Supply by 2028

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Taiwan’s leading display manufacturers are accelerating factory divestments as they shift away from competing on production scale toward a strategy focused on high-value-added products.

TrendForce’s latest display industry research reveals that continued capacity rationalization and changes in the competitive landscape are expected to reduce the combined LCD monitor panel supply share of Innolux and AUO to below 10% by 2028. Their combined share of the LCD notebook panel is also projected to decline to around 20%. LCD TV panels, which remain relatively profitable, are expected to maintain a supply share of approximately 22%.

TrendForce believes that the recent wave of capacity consolidation and asset optimization by Taiwanese panel makers represents more than corporate restructuring—it will become a key factor reshaping the future supply-demand balance of the global LCD TV, monitor, and notebook panel markets.

Innolux’s older fab may be repurposed for advanced packaging

Innolux plans to shut down its Fab 3 production line, which primarily manufactures LCD notebook panels, between late 2027 and 2028, marking the gradual withdrawal of its notebook LCD capacity over the coming years.

One reason behind the shutdown is the continued ramp-up of 8.6-generation OLED production lines, which is accelerating OLED adoption in notebook PCs and placing structural pressure on pricing and demand for conventional LCD notebook panels.

Additionally, Innolux has made progress in fan-out panel-level packaging (FOPLP), co-packaged optics (CPO), and through-glass via (TGV) technologies. As a result, the Fab 3 site could eventually be transformed into an advanced packaging and high-value application integration center. TrendForce believes this transition would strengthen the company’s business resilience while reducing its exposure to prolonged price competition.

AUO redirects investment toward Micro LED, AI, and CPO as further capacity consolidation comes into focus

AUO has accelerated its transformation by redirecting capital toward Micro LED, AI-related technologies, and CPO-based advanced packaging. The company recently announced the sale of its Hwa Ya Plant in Taoyuan to Quanta Computer and its Kaohsiung C5E facility to ASE Technology.

TrendForce notes that the Hwa Ya site includes the L3D and L5D production lines, both of which are expected to cease operations during the first half of 2027. L3D, formerly the primary production site for Garmin smartwatch panels, will have its production transferred to other facilities after closure.

L5D, which mainly produces automotive, industrial, and medical display panels, will have its capacity relocated to the L6B and L6A production lines. As AUO continues to streamline its open cell capacity, the company has also decided to sell the C5E color filter plant.

TrendForce believes that Chinese panel makers will continue expanding their share of the notebook panel market while notebook demand increasingly shifts toward OLED. Against this backdrop, the market will closely watch whether AUO seeks buyers for additional legacy LCD notebook production lines, such as L5C or L6A. If L5C is sold, the adjacent L7A facility on the same site could also become a divestment candidate, with potentially significant implications for the global display industry.

Capacity rationalization will reshape supply-demand dynamics across three major panel applications

For the LCD TV panel market, the absence of major new capacity investments and a continued trend toward larger screen sizes are expected to keep supply in a healthy but relatively tight state between 2026 and 2030. If AUO ultimately sells its L7A facility, global LCD TV panel supply area would decline by approximately 2.1%, further tightening market supply.

In the LCD monitor panel market, TrendForce estimates that China’s top three panel makers will account for 74% of global LCD monitor panel supply in 2026. Together with LG Display’s continued reduction of LCD production in favor of OLED, the supply-demand balance for LCD monitor panels is expected to become increasingly stable.

If AUO proceeds with the closure of its L6A fab, the global supply of LCD monitor panels would decrease by nearly 5 million units. Such a reduction would materially tighten market conditions while also raising the question of whether more 8.6-generation OLED manufacturers will allocate resources to monitor panel production, thereby accelerating OLED penetration.

For the notebook panel market, OLED adoption is expected to accelerate rapidly as leading notebook brands increasingly transition future product portfolios toward OLED displays. This trend will further exacerbate the already oversupplied LCD notebook panel market.

TrendForce notes that shutting down production lines dedicated primarily to LCD notebook panels has become increasingly unavoidable. The sale of L5C and L6A would not only reduce AUO’s financial burden from continued operating losses but also help improve the supply-demand imbalance across the broader LCD notebook panel market.