It's a rather old trick. Tighten the belt on output and you can keep prices high. AUO is leading the charge but other big business panel companies like Samsung and LG Display are also planning to cut production.
There has been a glut of inventory with shipments particularly cautious in the Europe and North America regions, which forced panel prices to sit in the lower end of the spectrum in June. Cutting supply is a counter strategy, says Taiwan Economic News.
AUO has cut glass purchase and will lower its capacity utilisation to 80 percent from 85 percent.
We'll see that change in the third quarter. Chimei is expected to knock ten percent off its capacity, from 90 to 80 percent in the same quarter. Both Samsung and LG will follow suit.
We will be taking market conditions into account, says AUO, meaning despite the overall health of the sector it's not quite seeing the margins it would like.