AU Optronics Corp (AUO, 友達光電) yesterday said it planned to resume plans to build a sixth-generation (6G) factory in China that will produce high-end LCD flat panels used in smartphones and tablets, rather than large television panels as previously planned.
The nation’s No. 2 LCD panel maker has suspended the construction of an 8.5 generation (8.5G) plant, in China’s Kunshan City, Jiangsu Province, for about three years citing severe oversupply and weak global demand, which drove most panel companies into the red.
AUO originally planned to build the 8.5G plant to make TV panels via a joint venture with the Kunshan government. AUO got as far as completing the construction of the factory’s shell.
“The 6G plant will produce high-end flat panels for smartphones and tablets, using our low-temperature polycrystalline silicon [LTPS] technology,” company spokesperson Jessie Lee (李葦珠) said by telephone.
“We are seeing strong demand in China, which consumes 30 percent of smartphones made worldwide,” Lee said.
AUO said about 40 percent of smartphone panels made in its factories were shipped to China, making the country one of the company’s major revenue sources.
LTPS panels are expected to be used in more mobile devices from 2 percent penetration last year, as such panels can enhance their resolution to above 330ppi high-definition level and reduce power consumption, TrendForce Corp (集邦科技) said in a report released last month.
Amazon.com and Google have used LTPS panels in their high-definition Kindle Fire HD e-reader and Nexus 7 tablet respectively.
AUO’s announcement came amid a slew of LCD panel makers including Samsung Electronics, LG Display and Chinese makers such as BOE (京東方) planning to launch more 8.5G plants in China over the next few years. By 2015, there will be eight 8.5G plants in operation in China, according to NPD DisplaySearch’s forecast.
“For AUO, it should be a better choice to build a 6G plant in China because of less investment and bigger flexibility in making different sizes of panels,” TrendForce analyst Locke Chang (張小彪) said.
It will take NT$80 billion (US$2.65 billion) to US$100 billion to build an 8.5G production line, while it will only take half of the investment to build a 6G production line, Chang said.
The Hsinchu-based LCD panel maker did not release investment figures yesterday, with the amount invested and date of operation for the new Chinese plant depending on fundraising progress and the market situation, Lee said.
The company yesterday ordered new LCD panel manufacturing equipment worth NT$4.12 billion from equipment suppliers, including Applied Materials Inc and Hitachi Ltd, according to a company statement submitted to the Taiwan Stock Exchange. Shares of AUO rose 0.11 percent to NT$9.37 yesterday.