Fri, Dec 11, 2009 - Page 11 News List

AU Optronics considering first acquisition since 2006

THINGS LOOKING UP The liquid-crystal display maker, recovering from slack demand caused by the global recession, recently reported its first profit in four quarters

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AU Optronics Corp (AUO, 友達光電), the world’s third-largest maker of liquid-crystal displays, is considering making its first acquisition since 2006 as consolidation accelerates in the industry, chairman Lee Kun-yao (李焜耀) said.

“Either we grow organically inside, or we have a chance to acquire outside capacity,” Lee, 57, said on Wednesday. “It’s time many companies consolidated to reduce competition.”

While there was no “concrete” deal, Lee said AUO has received proposals from investment banks as slowing growth encourages mergers in the US$88 billion industry.

Innolux Display Corp (群創光電), a unit of Hon Hai, the world’s largest contract manufacturer of electronics ranging from Apple Inc’s iPods to Sony Corp’s PlayStation game consoles, said on Nov. 14 it had agreed to buy Chi Mei Optoelectronics Corp (奇美電子) in a NT$172 billion (US$5.3 billion) deal.

AUO ranks third in the LCD market after Samsung Electronics Co and LG Display Co.

Chunghwa Picture Tubes Ltd (中華映管) said on Dec. 1 that it was open to industry consolidation after the Chinese-language Economic Daily News reported investors were speculating the firm was in talks to be acquired by AU Optronics. A Chunghwa spokeswoman, who asked not to be identified, declined to comment.

“Everything is possible,” AUO’s Lee said. “We don’t have fixed rules on doing anything.”

The company bought Unipac Optoelectronics Corp (聯友光電) in 2001 and Quanta Display Corp (廣輝電子) in 2006.

Capital spending next year will probably increase 20 percent to 30 percent from the NT$70 billion to NT$75 billion the company plans to invest this year, Lee said.

AUO is recovering from a collapse in demand caused by the global recession. The company in October reported its first profit in four quarters. A rebound in the global economy will also boost AUO’s factory use in the first quarter of next year from 90 percent now, Lee said.

Revenue in the LCD industry will rise 5 percent to US$93.3 billion next year, after a 15 percent decline this year, industry researcher Display Search forecasted on Oct. 19.

“It’s not surprising that AUO is considering an acquisition since the global economy is recovering and demand is rising,” said Robert Hsieh, who helps manage US$250 million, including AUO shares, at Shin Kong Investment Trust Co (新光投信).

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