AUO to Procure NT$2.74 B. Worth of 7.5G TFT-LCD Equipment

Taipei, Dec. 30, 2005 (CENS)--AU Optronics Corp. (AUO), Taiwan's No. 1 large-sized thin film transistor-liquid crystal display (TFT-LCD) panel maker, recently announced plans to procure production equipment worth NT$2.74 billion (US$82.28 million at US$1: NT$33.3).

Industry sources pointed out that the purchases would include 7.5th-generation (7.5G) front production-process equipment. Suppliers are to begin installing the machinery at AUO's new 7.5G panel plant in the Central Taiwan Science Park (CTSP) in April 2006. AUO's first-stage monthly capacity goal at the 7.5G plant is about 30,000 substrates, the sources said.

By using the 7.5G equipment, the sources analyzed, AUO is expected to shorten the time it has fallen behind major South Korean panel producers to less than six months. According to the sources, Samsung's 40-inch and LG.Philips LCD Co., Ltd.'s 42-inch TV panels are scheduled to enter the market in the first half of 2006. AUO is expected to begin volume production at its new 7.5G plant in the third quarter of the same year.

Some insiders familiar with AUO said that the company placed orders for 7.5G exposure equipment with Nikon some time ago, and that it recently re-confirmed its order for plasma enhanced chemical vapor deposition (PECVD) equipment from Applied Komatsu Technology Inc. AUO has also reportedly procured three 7.5G substrate-manufacturing machines, three to four sets of 5G equipment, and testing and inspection equipment. That means, the market sources added, that AUO is still expanding its 5G capacity while also accelerating deployment of its 7.5G business.

AUO's major local rival-Chi Mei Optoelectronics Corp. (CMO), the No. 2 TFT-LCD panel maker in Taiwan-is scheduled to install 7.5G equipment in the third quarter of 2006. But the company claimed that it already has a 5G panel manufacturing line to produce TV panels, which gives it adequate production capacity for the time being.

With a 7G line that currently mass-produces LCD TV panels, industry sources said, Samsung is expected to engage in price-cutting competitions with major TV panel makers in Taiwan, who specializes more in 37-inch panels.

The industry experts also said that Taiwan panel makers are expected to effectively counter South Korean rivals' price-cutting moves if they ramp up production in time at new 7.5G facilities.