TAINAN, Taiwan -- Foxconn's panel arm Innolux is planning to slash more than 10,000 jobs this year as part of the company's aggressive efforts to increase the use of automation in manufacturing, said Honorary Chairman Tuan Hsing-Chien on Tuesday.
"We will reduce our total workforce to less than 50,000 people by the end of this year, from some 60,000 staff at the end of 2017," Tuan said in a press conference.
Innolux is a liquid crystal display-making affiliate of major iPhone assembler Hon Hai Precision Industry, better known as Foxconn Technology Group. Tuan is also a technology adviser to Foxconn, Sharp and Innolux.
Tuan said up to 75% of production will be fully automated by the end of 2018. Most of Innolux's factories are in Taiwan.
Tuan's pledge came a few days after Foxconn Chairman Terry Gou said the company would pour in some $342 million to overhaul its manufacturing process by using artificial intelligence.
Innolux does not sell to Apple but supplies TV, notebook, monitor and smartphone displays to a wide range of customers including HP, Dell, Samsung Electronics, LG Electronics, TCL, Hisense, Panasonic, Hitachi and Sharp.
As other major display makers such as LG Display, Japan Display and China's BOE Technology Group are eager to churn out organic light emitting diode, or OLED, displays that are chiefly made by Samsung Electronics currently as they hope to gain orders from Apple. But Innolux said it would not compete in such a crowded market.
OLED provides sharper color contrast and a brighter display compared with LCD. More importantly, OLED panels can be molded into curved screens and possibly made foldable. Apple's most premium phone iPhone X uses OLED screens and there are expectations that up to two new iPhone models will also be equipped with OLED panels.
Innolux is working on a new type of display, called active matrix mini LED, or AM mini LED, according to Executive Vice President Ting Chin-lung. These can offer almost all the advantages that OLED screens do, including better contrast and flexibility that allow them to become foldable.
Ting said his company was currently talking with automakers to use mini LED for in-car displays, as OLED which is sensitive to temperature changes could be too vulnerable for such applications. But it will still take as long as two years for such technology to bring substantial revenue, Ting said. He added that mini LED could later be developed into Micro LED, an even more advanced display technology that Apple also requires.
Boyce Fan, an analyst at Taipei-based research company WitsView, said mini LED is currently more expensive than OLED, so it would be hard for Innolux to compete in the consumer electronics such as smartphones that require large quantities of those units.
"We do agree that the performance of mini LED can rival with OLED and its durability could be better than OLED, but the cost is still too high ... The target market could be first limited to automotive displays and premium monitors for PCs or notebooks," said Fan.
For all 2017, Innolux's revenue increased nearly 15% to 329.17 billion New Taiwan dollars ($11.22 billion) from a year ago.
Both Innolux and Hon Hai shares were unable to escape the selling pressure on Tuesday, as they dropped by 4.9% and 3.9%, respectively, but they were marginally better off than the benchmark Taiex index's decline of 5.0%.