Businessmodel of AU Optronics

Customer Segments

AU Optronics produces electronic displays and solar energy products, primarily for manufacturers of electronic devices.

According to the Company’s 2015 annual report, a significant portion of AU Optronics’ revenue is generated through doing business with a small set of customers. The report states that the Company’s five largest customers accounted for 39.7%, 33.4% and 36.5%, respectively, of net revenue in 2013, 2014 and 2015.

Certain of AU Optronics’ customers account individually for more than 10% of AU Optronics’ annual net revenue, notably electronics giant Samsung Group accounted for 13.8%, 10.2% and 11.7% of net revenue in 2013, 2014 and 2015, respectively.

Value Propositions

AU Optronics offers value to its customers by providing quality, efficient and reliable products. The Company is among the most well-respected operators in its industry, as demonstrated by its association with high-profile companies such as Samsung, and collaborates with a range of partners to provide its customers with the best possible products.

Despite its standing, AU Optronics continues to develop new technologies with a view to creating innovative, industry-leading products. Customers and suppliers of AU Optronics receive ongoing technical support and assistance, both directly from AU Optronics representatives and through online resources hosted on the Company’s website.

Channels

AU Optronics operates mobile and desktop websites at www.auo.com, where customers can browse the Company’s catalogue of products and services.

Sales however are not made through the website, rather customers are able to purchase AU Optronics’ products directly through contact with the Company’s sales team or through a network of authorised distributors and online resellers.

Customer Relationships

While AU Optronics details its products and services on its website, purchases cannot be made directly from the Company on a self-service basis. Instead customers are able to contact the AU Optronics sales team directly in order to place orders and make enquiries.

Products can also be purchased from authorised distributors and a network of online resellers. AU Optronics provides its customers with a range of technical support resources, guides customers directly through assistance online, over the phone and over email.

The Company also interacts with its customers through its social media accounts, including mainstream networks Facebook and Twitter, as well as lesser-known micro-blogging and social networking platform Plurk.

Key Activities

AU Optronics’ operations are divided into two business segments: Display Business and Solar Business.

The Company’s Display Business accounts for the vast majority of its revenue. This segment comprises the research, development, production and sale of thin film transistor liquid crystal displays and other flat panel displays used in a range of products, including televisions, mobile devices, personal computers and monitors.

AU Optronics’ Solar Business involves the design and manufactures of solar photovoltaic modules and systems used in the generation of heat and electricity. The Company is also a market leader in developing low carbon initiatives for a sustainable environment.

Key Partners

AU Optronics collaborates with a range of companies and service providers across the world. This includes distributors, affiliates, and electronic and solar production companies.

AU Optronics lists a number of affiliate companies on its website, divided into six categories: LED Solutions, Green Energy, IC Design, Chemical and Materials, System Integration, and Inverter. Among these affiliate partners are electronics companies Lextar, Qisda, Darfon, Raydium and Dazzo.

The AU Optronics Solar Business also lists a number of operating partners, comprising renewable energy and solar technology companies in Africa, Asia, Europe, Oceania and the US. This includes South African operator Solaire Direct, US-based Crawford Electric, Korean company JungLim, French operator KDI Solaire and Australia’s Apollo Energy.

The Company has also had strategic partnerships with high-profile companies such as Evonik and Sony.

Key Resources

AU Optronics’ key resources are its proprietary technologies, its manufacturing facilities and supply chain networks, its logistics and warehousing facilities, its sales and distribution networks and its personnel.

Searches of records held by the US Patent and Trademark office identified a number of patent applications filed in AU Optronics’ name, including applications entitled ‘Display panel and scanning circuit’, ‘Display and method of generating an image with uniform brightness’ and ‘Organic light-emitting diode display panel’.

Cost Structure

AU Optronics incurs costs in relation to the acquisition of manufacturing supplies, the operation of production facilities, the management and operation of warehousing and logistics networks, and the retention of its personnel.

The Company employs more than 45,000 workers worldwide, all accounting for costs in the form of salaries and benefits, and operates offices across Asia, Europe and the US.

Revenue Streams

AU Optronics generates revenue through the manufacture and sale of electronic display units and solar products. In the year ended 31st December 2015, AU Optronics recorded an annual net revenue of just under $11 billion. The Company’s display business accounted for the vast majority of its annual revenue, generating $10.17 billion, representing more than 92% of the Company’s total 2015 revenue. AU Optronics’ solar business recorded $822 million in annual revenue, accounting for around 8% of the Company’s business that year.

AU Optronics’ 2015 revenue was down around 11.7% on the previous year, in response to weak global demand and supply, reportedly caused by the rise of Chinese competitor BOE Technology Group. The Company’s ability to maintain or increase its revenues depends principally on its ability to retain market share, develop and increase its sales, and introduce and develop new and innovative products. According to its most recent annual report, AU Optronics’ revenue depends largely on the business of a small number of customers.