AU Optronics Corp (AUO, 友達光電), the nation’s biggest liquid-crystal-display (LCD) panel maker, said yesterday its board had approved a plan to form a joint venture with China’s No. 5 TV maker Sichuan Changlong Electric Co Ltd (長虹) to assemble TV panels in China, aiming to extend its reach in the world’s fastest-growing TV market.
AU Optronics said it believed China would outpace the US as the world’s biggest LCD TV market in a year or two.
“If the investment plan is approved by the government, the joint venture is expected to form closer ties between AU Optronics and the Chinese local brand maker, deepening AU Optronics’ presence in West China, in addition to the company’s existing business presences in East China and South China,” AU Optronics said in the statement.
LCD TV shipments in China are expected to grow by a faster-than-expected pace to 23.6 million units this year, making up nearly one-fifth of the 127 million global LCD TV shipments, DisplaySearch said in a recent forecast. The researcher originally estimated the shipments in China would be 18.8 million units this year.
Shares of AU Optronics leapt 4.13 percent to NT$32.8, outpacing the benchmark TAIEX index’s 1.77 percent gain yesterday.
The Hsinchu-based panel maker planned to invest 100 million Chinese yuan (US$15 million) in the venture, BVCH Optronics (Sichuan) Corp (長智光電(四川)有限公司), in the initial stage, allowing it to hold a 51-percent stake. Sichuan Changlong will own the remaining 49-percent share, it said.
AU Optronics said it expected the company to start operation in the fourth quarter of this year at the earliest. BVCH Optronics will make LCD monitors, LCD TVs, photonic products and other components used in the LCD panels, as well as provide maintenance services, the statement said.
“We believe the cooperation will have a positive impact on AU Optronics in terms of revenue and profit,” said Dale Gai (�?s), a flat-panel analyst with Yuanta Securities (元大京華證券), by telephone.
“It will be a more cost-effective way for local panel makers to build next-generation, such as seventh-generation [7G], plants, in China,” Gai said.
At present, the government only allows local companies to assemble LCD panel modules in China, but the Ministry of Economic Affairs has said it will review restrictions on various industries in a meeting scheduled for next month.
Gai expected orders from Changlong to account for a mere 5 percent of AU Optronics’ TV panel shipments this year.
In a separate statement, AU Optronics said the board had given the green light to a preliminary plan to invest US$125 million in Japanese polysilicon and monocrystal silicon wafer maker M. Setek by subscribing in new shares — an aggressive attempt to diversify into the green energy industry. AU Optronics will eventually purchase more than 50 percent of M. Setek shares, it said.
Last month, AU Optronics spun off a solar business unit, creating the subsidiary AUO Energy Taiwan Corp (AET, 友達能源技術公司), which will offer services such as installation of solar energy systems and other renewable energy sources for industrial facilities, company buildings and households.
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