Hon Hai plans to make flat panels for its computers

Hon Hai Precision Industries Co (鴻海精密), one of the nation's largest computer makers, is mulling entry into the TFT-LCD (thin-film transistor liquid-crystal display) industry, an insider said yesterday.

Duan Hsing-chien (段行建), former president at Taiwan's largest TFT-LCD maker, AU Optronics (友達光電), said he has been in discussions with Hon Hai on the possibility of setting up an advanced TFT-LCD manufacturing facility.

TFT-LCDs are used for PCs, PDAs and other applications where thin viewing screens are needed. Taiwan is currently the largest LCD producer, securing about half of the global market during the first quarter, according to analysts at the Market Intelligence Center (市場情報中心).

Duan confirmed the company had been talking with him about establishing a TFT-LCD unit.

Hon Hai is also in talks with Chunghwa Picture Tubes Ltd (中華映管), the third largest TFT-LCD panel maker in Taiwan. The two companies may jointly build an advanced TFT-LCD production facility.

The fifth-generation plants will produce large display panels. These factories can cost as much as US$1.5 billion.

Earlier this year, the chairman of Chunghwa Picture Tubes, Lin Chen-yuan (林鎮源), said that the only major PC component Hon Hai cannot produce is TFT-LCDs.

TFT-LCD prices have been falling recently. Analysts at the Market Intelligence Center expect per-unit prices to drop by US$5 to US$10 each quarter for the rest of the year.