AUO Urges Gov't to Allow China-Bound LCD Investment

Taipei, Sept. 3, 2009 (CENS)--AU Optronics Corp., currently Taiwan's No.1 LCD-panel maker, yesterday openly suggested that the government should lift ban on Taiwanese LCD investments in mainland China lest the world's most potential market for LCD TVs would not be controlled by South Korean and Japanese manufacturers.

AUO made the suggestion for the first time since the government put the ban into effect few years ago on pretext that allowing the investments by Taiwanese manufacturers in the mainland would threaten the island's LCD industry since the mainland remains far behind Taiwan in the technology.

However, in anticipation that the mainland will likely grow into the world's biggest single market for LCD TVs in 2011, inspiring an increasing number of Japanese and South Korean panel makers to pledge plans to open eighth-generation panel factories in the mainland, AUO eventually ignored the government-erected investment taboo to voice its worry about the future of the Taiwan industry.

The mainland authorities have recently decided to encourage foreign manufacturers to open LCD-panel factories in the mainland in light of an ineffective local industry after five years of protection.

AUO executives estimated the mainland now alone accounts for 20% of global consumption of LCD TVs and will absorb 20% of AUO's shipments this year. They said the company hopes to hammer out with the government a balancing policy that can protect the Taiwan industry while lifting the ban.

No.2 Taiwanese player Chi Mei Optoelectronics also hopes the government to scrap the out-of-date ban. However, the company has kept a cautious attitude towards the mainland's LCD investment policy, which, the company's executives have cautioned, will likely to trigger oversupply as it does not impose any capacity restriction.