TAIPEI (Taiwan News) — Taiwan’s leading LED panel makers, AUO and Innolux, outlined a cautious outlook for the second half of the year in earnings calls last week.

Innolux is adjusting operations by encouraging employees to take every other Friday off, allowing them to combine long weekends with holidays such as Mid-Autumn Festival, Double Ten, and Constitution Day, potentially creating nine-day breaks, UDN reported.

The company’s utilization rate for its latest-generation production lines has dropped below 80% and could fall to 75% in the third quarter. Innolux said tariff uncertainty is weighing on demand, potentially leading to a single-digit decline in both its display and non-display business segments compared with the second quarter.

A sluggish business outlook is prompting AUO and Innolux to diversify into areas such as software, automotive system integration, and semiconductor technology. Existing factories have been repurposed, and capital expenditures have been reduced in recent years.

AUO announced it will cut full-year capital expenditures by NT$2 billion (US$66 million) to NT$28 billion, down from the original NT$30 billion target. The company said it has no plans to expand panel production capacity and will use working capital to support new businesses, Commercial Times reported.

Innolux is focusing on transformation in medical technology, fan-out panel-level packaging, and automotive applications. In the second quarter, non-display revenue accounted for 28% of total sales. Subsidiary Raysun Optoelectronics has gone public, and automotive subsidiary CarUX is moving toward an IPO.

Innolux’s capital expenditures this year are estimated at NT$16 billion, with no new production capacity planned. Most of the spending will go toward technology upgrades.