The government is considering allowing Chinese TV makers buy up to a 20 percent share in local LCD panel makers in a move to help local companies compete with their South Korean rivals in China, a Ministry of Economic Affairs official said yesterday.
The move would be the latest relaxation of cross-strait trade after the government last year eased restrictions on local panel makers wishing to build next-generation plants in China.
South Korean LCD panel makers have obtained Beijing’s approval to build next-generation plants in China to produce TV panels. Taipei has approved a proposal from AU Optronics Corp (友達光電), the nation’s No. 2 LCD panel maker, to build a US$3 billion TV panel factory in China.
There is now the possibility of the government allowing Chinese TV makers to own a stake in local flat-panel makers, as the investment would deepen the cooperation between the two sides of the Taiwan Strait and help local flat-panel makers benefit from the fast-growing TV market in China, an official at the ministry’s Industrial Development Bureau, who spoke on the condition of anonymity, said in a telephone interview yesterday.
However, there would be limits. Chinese investment would be capped at a 20 percent stake in local panel manufacturers and Chinese TV manufacturers would not be allowed to be the largest single investors in the companies, the official said.
However, nothing concrete has been concluded yet, the official said.
A final decision will only be made after more discussion within government agencies concerned with cross-strait issues, including the ministry’s Investment Commission, before sending the proposal to the Cabinet for final approval.
Taiwanese flat-panel makers welcomed the government’s intention to liberalize cross-strait investments.
AU Optronics said by telephone that the company was positive about the “opening-up.”
The nation’s two largest flat panel makers, AU Optronics and Chimei Innolux Corp (奇美電子), together supply 50 percent of the LCD panels used by Chinese TV brands, AU Optronics said.
Taiwanese flat-panel makers also hope the government will permit local companies to form joint ventures with their Chinese peers, they said.
The government would relax restrictions incrementally, given the potential impact on the nation’s economy, the government official said.
Separately, AU Optronics was lowered to “neutral” from “buy” by UBS AG, which said the “strong” NT dollar could keep the company in the red until the fourth quarter, Bloomberg reported yesterday.
The brokerage cut its share-price estimate to NT$29.50 from NT$39, according to the report by Sean Kim, an analyst at UBS.