AU set to make handset screens

AU Optronics Corp (友達光電), the world's third-largest maker of flat-panel displays, will start making cellular-phone-sized screens by the end of this year to compete with Japanese companies that dominate the business.

The company has made prototypes of a screen that measures 9.7cm diagonally and will start mass production in the third quarter next year, it said in a statement, without providing details on production.

AU Optronics and its rivals in Taiwan and South Korea control most of the market for notebook computer screens. They are now aiming at Sharp Corp's stronghold in displays for televisions and mobile phones. The move will help AU Optronics boost profit, analysts said.

"Cell-phone screens are something that AU Optronics needs to get into," said Jeffrey Su, an analyst with CLSA Emerging Markets, who has an "outperform" rating on the stock. "It's a high-growth area."

South Korea's Samsung SDI Co last month said it will begin making color screens for mobile phones that don't require backlighting and plans to take the lead in that emerging business.

The first hand-held screens from AU Optronics will be used in mobile phones. After refinement of the technology, higher-resolution displays will be made for products such as digital cameras and televisions, the company said.

The company will invest NT$2 billion in a laboratory for the development of technologies for screens used in hand-held products, a local Chinese-language newspaper reported.