Wed, Dec 22, 2010 - Page 11 News List

Toppan CFI Taiwan to set up Chinese subsidiary

PAYING MUCH THE SAME PRICE:A DisplaySearch report on panel prices revealed that IT panel prices had showed little change in the second half of this month

By Kevin Chen  /  Staff reporter

Toppan CFI Taiwan Ltd (台灣凸版國際採光), a color-filter supplier 49 percent owned by AU Optronics Corp (AUO, 友達光電), said yesterday that it planned to set up a Chinese subsidiary in Kunshan, Jiangsu Province, for NT$5 billion (US$167 million).

Toppan CFI said its board approved the investment plan, which would be the Tainan-based company’s first investment in China, a stock exchange filing posted by its parent company AUO, said.

The Chinese subsidiary will be tentatively named Toppan AUO CFI (Kunshan) (凸版友達彩光昆山) and the investment will proceed only after it gains regulatory approval, the filing said.

The latest investment plan in color filters came after AUO, the nation’s second-largest LCD panel maker, last week won government approval for its application to set up a 7.5-generation fab in Kunshan at a cost of US$3 billion.

MAJOR COMPONENT

Color filters are one of the major components in making TFT-LCD panels. Japan’s Toppan Printing Co set up Toppan CFI in March 2001 and welcomed AUO to sit on Toppan CFI’s board in 2006, allowing the local panel maker to secure its supply of color filters and key technology.

Thus far, AUO has remained the sole local LCD maker to apply to launch LCD fab in China, despite competition from South Korea’s Samsung Electronics Co and LG Display Co.

However, Primasia Securities Co (犇亞證券) said yesterday in a note that oversupply would continue to pose a long-term problem for the sector, as China has recently approved several projects by domestic panelmakers to build new fabs, including BOE Technology (京東方), TCL, Tianma Microelectronics (天馬微電子) and Century Display (深超光電).

“Although AUO has been granted approval by Taiwan’s government to build a G7.5 [7.5 generation] plant in China, it is still restricted by Taiwan’s N-1 policy and may therefore lose out in terms of competitiveness to South Korea and China’s new G8 [eight-generation] fabs, which are more cost efficienct,” Primasia said in the note.

REQUIREMENT

The N-1 policy refers to the government’s requirement for local panel makers to maintain less-advanced technology in their Chinese fabs than those in Taiwan — at least one-generation behind.

Primasia Securities, which forecast that AUO would see a short-term seasonal rebound in share prices on restock demand for Lunar New Year, yesterday retained a long-term negative view on the stock because of concerns about expansion in capacities by South Korean and Chinese rivals.

Shares edged up 0.33 percent to NT$30.65 yesterday in Taipei trading.

Overall they have dropped 21 percent so far this year.

Separately, DisplaySearch’s latest industry report on panel prices showed that IT panel prices in the second half of this month were little changed from the first half, while those of TV panels registered a decline of between 1 percent and 2 percent over the same period.

ROBUST SALES

In addition, DisplaySearch said market demand for 10.1-inch and 11.6-inch panels remained stronger than that for other sizes of panels because of robust tablet PC sales.

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