Flat panel makers are cutting capacity during their peak season following a sudden drop-off in demand, a rare step that raises concerns the next downturn in a notoriously cyclical industry might come earlier than expected.

AU Optronics, the world’s third-largest manufacturer of LCD panels, said on Thursday it planned to use just 90 per cent of its capacity in the current quarter whereas its fabs, or fabrication plants, had been fully loaded in the past three months.