AU Optronics says it has no plans to spin off 3.5G fabs

Taiwan's biggest flat panel maker AU Optronics Corp (友達) yesterday dismissed market speculation saying it had no plans to spin off its less-advanced factories into a new company.

"AU Optronics did not have any discussion about spinning off the 3.5-generation facilities. The report is untrue," the company said in a statement released yesterday.

The company's remarks came after a Chinese-language newspaper yesterday reported that AU Optronics planed to spin off three of its less-advanced plants to create a new entity focusing on making small- and-medium-sized liquid-crystal-display panels.

The three 3.5G fabs make panels primarily used in mobile phones and portable DVD players. AU Optronics, the world's No. 3 maker of large-sized panels for computers and televisions, only had 2 percent of its revenues of NT$59.5 billion from the small-and-medium-sized panels last quarter.

"I don't see sufficient reason for AU Optronics to spin off the 3.5G plants. Besides, it's not easy to take the lead amid intensive competition in that area," said Wang Wanli (王萬里), an analyst with Credit Suisse First Boston in Taipei.

The only advantage of such a move would be that AU Optronics would be looked on more favorably in the event of a merger, Wang said.

Ken Yu (余文耀), an analyst with SinoPac Securities Corp (建華證券), said it was not a must for the company to spin off the 3.5G factories in order to cement its relations with customers such as Motorola Inc, or to expand its customer base.