AU purchases 20 percent of Japan's Fujitsu Display

AU Optronics Corp (友達光電), the world's third-largest flat-panel display maker, said it has signed an agreement to buy a 20 percent share in Japanese rival Fujitsu Ltd's display unit, an AU executive said yesterday.

The Taiwan-based manufacturer will retain one seat on the board at Fujitsu Display Technologies Corp. The remaining 80 percent of Fujitsu Display's shares are held by Fujitsu, according to AU Chairman Lee Kun-yao (李焜耀).

"The venture aims to upgrade AU's production technologies, particularly wide-view-angle technology that is needed for large-sized LCD panels used in LCD-TVs," Lee said.

AU's fifth-generation (5G) factory, which produced its first panel in December, will also produce large-sized panels.

Specialized equipment in 5G factories help to reduce manufacturing costs by increasing the number of screens cut from a sheet of glass.

"Our 5G manufacturing plan is proceeding on schedule," said Chen Hsuan-bin (陳炫彬), AU's president.

The 5G factory is scheduled to begin commercial production in the second quarter, reaching full capacity in the third quarter, Chen said.

AU said its net loss in the fourth quarter narrowed by 37 percent to NT$778 million year-on-year. The loss can be attributed to declining panel prices, as its average selling price for flat panels dropped US$184 in the fourth quarter from the previous quarter's US$235, the company said.

Lower prices in the fourth quarter, however boosted demand and depleted inventories at retailers, Lee said, adding that the demand is expected to continue expanding this quarter.

"With consumers gradually choosing LCD monitors to replace cathode-ray-tube screens and more computer companies bundling LCD monitors with their PCs, we believe that demand for LCD-monitors will strengthen," Lee said.

Lee said the outlook for local panel makers is improving, but analysts warned that South Korean rivals may soon boost production.

"As soon as Samsung and LG.Philips LCD overcome technical problems in their 5G production processes, they will flood the market with new products and put pressure on local makers, including AU Optronics," said Frank Su (蘇穀祥), an analyst at BNP Paribas Taiwan.

This could happen as soon as this quarter, he said.

Debbie Wu (吳岱玲), an analyst at Yuanta Core Pacific Securities Co (元大京華證券), said most panel makers are expected to see a drop in sales this year, because unit prices of panels are on the decline.