AUO Emerges as a Major Supplier to Apple for Displays for iPad2

Taipei, March 31, 2011 (CENS)--AU Optronics, Taiwan's leading flat panel display (FPD) supplier, has become a major supplier to Apple, after receiving, for the first time, huge amount of orders for panel displays for iPad2.

The move is part of Apple's strategy to cope with the growing competition for tablet PCs from its rivals, such as Samsung. A ranking official of AUO refused to verify the deal.

The demand will give a strong boost to AUO in both sales and profits, since price offered by Apple is three to four times the going price for displays of the same size.

Market players estimate that the Apple order could amount to 100,000 pieces daily, or 30 million a year, about half of the demand of the global tablet-PC market.

AUO, thus, has outpaced its domestic archrival, Chimei Innolux, in penetrating Apple's supply chain. Chimei Innolux has been seeking the certification of Apple for its 9.7” displays and has reportedly trying to merge or ally with the FPD department of Hitachi, owner of the patented IPS wide-viewing angle technology, in order to win more iPad orders.

AUO has reportedly reserved half of the capacity of its fifth-generation plant in Taichung for the production of 9.7” displays for iPad 2 and has secured licensing of IPS technology from Hitachi.

Due to the rigorous demand Apple for specifications, the yield rate can reach only 60-70%.

Currently, LGD and Samsung are two major suppliers of 9.7” displays for iPad, which are also partially supplied by some Japanese firms. Apple decided to ally with AUO, since Samsung will launch its own tablet PCs and compete heads-on with Apple in the second quarter. Japanese suppliers, such as Hitachi and Toshiba, are incapable to meeting the demand of Apple, due to effect of the massive earthquake on their capacities, as well as their smaller capacities.

DisplaySearch predicts that the global output of 9.7” displays, or iPad displays, will top 57 million pieces this year, dominating the demand of the global tablet PC market, which will reach 60 million units. Apple orders, therefore, will guarantee presence of FPD suppliers in the tablet-PC market.