The Ministry of Economic Affairs (MOEA) yesterday announced the formal lifting of bans on local LCD makers investing in China, by allowing them to buy stakes in or merge with their Chinese peers, as well as scrapping the restriction that their Chinese fabs must be one generation behind those of Taiwan.
It said, however, that all applications would be screened on a case-by-case basis.
“Panels will be used mostly by large-sized TVs, and China is growing more rapidly than all other markets,” Vice Minister of Economic Affairs Hwang Jung-chiou (黃重球) told a press conference.
As many as 45 million LCD TVs were sold in China last year and sales are projected to top 60 million this year — which are promising shipment figures compared with the US and Europe, which are still crawling out of the financial crisis, he said.
Two major changes in the regulations include allowing Taiwanese firms to hold a stake in their Chinese peers or buy them out, as well as permitting them to set up fabs in China that use technologies as advanced as those in Taiwan on the condition that Taiwanese facilities have started mass production.
Both amendments are perceived by the industry as attempts to salvage Taiwan’s top two panel makers — AU Optronics Corp (AUO, 友達光電) and Chimei Innolux Corp (奇美電子) — from their current predicaments.
The ministry in December granted a much-awaited green light for AUO’s planned US$3 billion investment to build a 7.5-generation (7.5G) fab in Kunshan, Jiangsu Province.
The go-ahead from the ministry was late in coming, causing AUO to miss out on three licenses from China to set up advanced fabs.
The second major revision is to scrap restraints under which Taiwanese LCD makers are not allowed to set up fabs in China with better technology than those of Taiwan, the ministry said.
That means in the past, Chimei, which has an 8.5G fab in Taiwan, was allowed to set up fabs running only on 7.5G technology in China.
However, Chimei has said a 7.5G fab would not enhance its competitiveness in China and it wanted to build an 8.5G fab.
The ministry said Chimei met the new requirements because its 8.5G plant in Kaohsiung hit mass production by producing 24,000 sheets of panels a month as of December.