Mon, Mar 14, 2011 - Page 12 News List

AUO assesses damage to LCD panel supply chain

FULL STEAM AHEAD:Following a government decision to relax its rules on operations in China, AUO will seek permission to revise its investment plan

By Kevin Chen  /  Staff reporter

AU Optronics Corp (AUO, 友達光電) has suspended production at a plant, which makes polysilicon used in solar wafer manufacturing, in Japan and is assessing potential quake damage to supply chains in the LCD panel industry, the company said.

The Hsinchu-based company said in a statement on Saturday that its manufacturing facilities had not been damaged and there had been no casualties at its Japanese solar-wafer unit, M.Setek Co, in Fukushima Prefecture, one of the areas hardest hit by the magnitude 8.9 earthquake on Friday.

M.Setek produces polysilicon and solar wafers in Soma City, Fukushima Prefecture, both of which are key raw materials for making solar cells. AUO has in recent years expanded into the solar power business, aiming to gain a foothold in the fast-growing green energy market.

AUO has about 800 employees in Japan, with about 700 working at M.Setek, chairman Lee Kun-yao (李焜耀) said yesterday on the sidelines of a job fair in Taipei.

“The [M.Setek] plant was not hit by the tsunami, but ... because of a lack of water and electricity, it is not operational at the moment,” local cable TV network UBN quoted Lee as saying yesterday.

The company downplayed the potential financial impact from the production suspension, adding that M.Setek contributed just 0.3 percent of AUO’s NT$102.62 billion consolidated revenue in the fourth quarter of last year.

As for the possible knock-on effect on the LCD panel industry, Lee said there would certainly be an impact in terms of the upstream supply chain, but that an accurate assessment would require more time.

“We have alternative sources of chemical materials,” Lee said, hinting that the earthquake has had a limited impact on the company’s flat-panel business.

US market researcher IHS iSuppli said on Friday that the earthquake would affect the production of components for LCD panels — including glass, color filters, polarizers, cold cathode fluorescent lamps and light-emitting diodes — as Japanese suppliers play an important role in this line of business.

Meanwhile, Lee said yesterday the company would re-apply to the Investment Commission for permission to change its Chinese investment plan, after the government announced on March 8 that it would allow Taiwanese LCD makers to buy a stake in or merge with Chinese counterparts, as well as invest in Chinese fabs using the same level of technology they currently employ in Taiwan.

In December, the company won government approval to invest US$3 billion in a 7.5-generation fab in Kunshan, China.

ADDITIONAL REPORTING BY CHEN MEI-YING

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