SAN JOSE, Calif. – Taiwan LCD maker AU Optronics Corp. got permission from the Taiwan government to build a generation 7.5 TFT-LCD fab in China. The company pushed regulators for greater openness to help it compete in the global market.
An investment commission in Taiwan's economic ministry approved AUO's request to build the fab. The company is expected to submit to the government additional information to expedite the investment process.
AUO already operates at least eight LCD fabs in three locations in Taiwan, including a generation 8.5 line slated for mass production in 2011. Due to political rivalries, the Taiwan government has long tried to keep a lid on technology transfer to the mainland, a sore spot for many local electronics manufacturers who have sought work arounds to gain access to China's low cost labor and vast markets.
"In a highly competitive international market, Taiwanese panel suppliers now have only very limited time to create early-mover competitive advantages in mainland China," AUO said in a statement announcing the approval. "We must work much harder to catch up," it said, calling on government officials to take a wider perspective.
"We hope the government could consider adopting a more lenient industry policy implemented by Taiwan's competitor countries, lifting the current restriction on fab generation and M&A investments in order to provide Taiwanese manufacturers with more flexibility for its global business strategy and boost Taiwan panel industry's global competitiveness," it said.
AUO had revenues of $11.2 billion in 2009, but took a loss of $852 million. It was profitable from the period 2005-2008.
In February 2010, the Taiwan government opened the door to local companies building TFT-LCD fabs in China. AUO submitted its application for the generation 7.5 fab a month later.
The company already has a wide variety of joint venture partnerships in China to assemble LCD modules and TVs. Its first LCD module assembly plant was set up in Suzhou in July 2002, and a second facility came online in September 2007 in Shanghai.
In April 2010, AUO's board approved joint venture deals to assemble modules and TVs with two of China's Top TV makers, TCL and Haier.