Sat, Dec 18, 2010 - Page 1 News List

Ministry finally gives AU Optronics’ 7.5-generation China fab green light

By Jason Tan and Lisa Wang  /  Staff reporters

Because of the government’s restrictions on technology use and M&A investments in China, Chimei Innolux Corp (奇美電子), the nation’s top LCD panel maker, has yet to apply to the government with an investment plan in China. Instead, the company has been striving to ramp up a 8.5-generation plant in Kao-hsiung to meet the government’s “mass production” requirement, a company official said.

“Chimei Innolux has no timetable to file an application,” company spokesman Eddie Chen (陳彥松) said by telephone.

The company’s priority is to boost monthly production from the Kaohsiung plant to as many as 60,000 units next year, from 20,000 units this year, he said.

Meanwhile, the ministry is mulling allowing Chinese home electronics makers to invest in Taiwanese panel makers.

“The move is still in its conceptualization stage,” Hwang said yesterday, adding that Chinese panel makers are definitely ruled out on concerns of technology competition, but the allowing Chinese home electronics makers to invest in Taiwanese firms could help the latter secure steady orders and engage more in the TV branding business so that they are able to compete with their South Korean and Japanese peers.

“Taiwanese companies face a dilemma when expanding in China,” said Locke Chang (張小彪), an analyst with WitsView research team at Taipei-based research firm TrendForce Corp (集邦科技).

“Growth potential in China is too big for local firms to ignore and there is the issue of possible new import tariffs on semi--finished LCD TV panels, but capacity doesn’t guarantee profits,” Chang said.

Overcapacity, which has been a major cause of industry downturns in the past, will be inevitable judging by the number of new plants in the pipeline, he added.

The Chinese government plans to release five licences for panel makers to build TV panel factories.

In the long term “it is an underlying concern that Chinese panel makers, who use patents and technologies from Taiwanese firms to produce panels, could grow big enough to become a threat to Taiwanese players,” Chang said.

In related news, the Investment Commission yesterday also approved the planned sale of a stake in Kbro Co (凱擘), the nation’s largest cable TV operator, to Da-fu Media (大富媒體) for more than NT$36 billion.

Carlyle Group, the owner of Kbro, has applied to sell 80 percent of Kbro to Da-fu, which was set up by brothers Daniel Tsai (蔡明忠) and Richard Tsai (蔡明興) from one of Taiwan’s richest families.

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