The nation’s two largest liquid-crystal-display (LCD) panel makers AU Optronics Corp (友達光電) and Chi Mei Optoelectronics Corp (奇美電子) yesterday said they have inked memorandums of understanding (MOUs) with China’s major TV vendors led by TCL Corp as demand from US and European customers dwindles amid the economic downturn.
The cross-strait tie-ups may help Taiwanese LCD panel makers in expanding their customer lineups to China, one of the world’s fastest-growing flat-panel TV markets, and lower their risk in the volatile LCD industry as well, analysts said.
On the back of the news, AU Optronics and Chi Mei stock prices jumped 3.61 percent and 3 percent to NT$24.4 and NT$10.3, respectively, outperforming the benchmark TAIEX index, which inched up 0.76 percent yesterday.
In a company filing to the Taiwan Stock Exchange yesterday, AU Optronics said it would form a strategic partnership with China’s top TV vendors via the building of a TV supply chain. AU Optronics did not provide financial details about the MOU.
Chi Mei said in a different stock exchange filing that it signed cooperation agreements with nine Chinese TV manufacturers, including TCL.
“China is certainly an important market for Chi Mei and it is one of few markets with relatively stable growth,” Chi Mei spokesman Denis Chen (陳世賢) told the Taipei Times by telphone.
The companies’ remarks followed a statement by Taiwan Affairs Office Director Wang Yi (王毅) on Dec. 21 in Shanghai that China would buy US$2 billion in flat screen monitors from Taiwanese companies.
Two local business dailies reported yesterday that AU Optronics Chairman Lee Kun-yao (李焜耀) and Chi Mei Optoelectronics Chairman Frank Liao (廖錦祥) would sign the pacts with nine Chinese companies at an industry forum in China yesterday.
The two Chinese-language newspapers — the Commercial Times and the Economic Daily News — said the nine Chinese TV makers include TCL, Haier Group (海爾), Chang-hong Electric Co (長虹電器), Konka Group Co (康佳) and Skyworth Digital Holdings Ltd (創維數碼控股).
“The purchase deal will not provide an immediate boost to Taiwanese panel suppliers in terms of shipments and revenues. But it will bring a positive impact in the long run on the back of China’s sizable TV market,” Roger Yu (游智超), who tracks the LCD industry for Polaris Securities Co (寶來證券), said yesterday.
The US$2 billion orders for Taiwanese panel makers that Beijing has promised may not look enticing at first sight as orders are expected to come in over the next three to five years, Yu said.
But the market potential in China is attractive, Yu said. Orders from Chinese customers could prove vital as they may help local firms offset reduced demand from Japanese and South Korean customers, he said.
The latest development also represents a twist in the long-term efforts made by local firms to break into the supply chain of the world’s major TV makers.
Most major Japanese and South Korean TV makers such as Sony Corp and Samsung Electronics Co have shifted production to their own factories, or their panel joint ventures for panel purchases, while cutting orders from Taiwanese suppliers, Yu said.
“China provides an alternative market for Taiwanese flat panels,” Yu said.
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