AU Optronics Airs Plans for 10G LCD Panel Plant
AU Optronics is plunging ahead with plans to invest $12.7 billion to build four new plants in Taiwan, including its first 10th-generation LCD factory, which may start production by 2010, industry officials said. The factories would be built over the next decade, AU said.
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The plants are planned for a new science park in Taichung, Taiwan, where Hon Hai Precision also is said to be preparing to build a factory. Construction of AU Optronics’ 10G plant, which will use 2.6 x 3.1-meter LCD glass, is expected to begin the second half of next year. The factory is expected to hit volume production of LCDs 54W and larger by 2011, said Avian Securities analyst Andrew Abrams. AU Optronics’ announcement of 10G plans Wednesday followed months of rumors that began in February when Chairman K.Y. Lee visited Central Taiwan Science Park to meet with the park’s Director-General Yang Wen-Ke. AU has applied for 1,729 acres of land in the park and plans to hire 10,000 workers for the plants.
The investment comes despite an oversupply of panels this year that has prompted many manufacturers, including AU Optronics, to rein in production. AU Optronics is considering a delay in increasing production at a hybrid 7.5/8.5G plant (CED July 28 p7). The hybrid factory is expected to start volume production this quarter or next, company officials have said. AU Optronics has 12 plants in Taiwan.
AU Optronics’ announcement prompted speculation that LCD glass supplier Corning might co-locate a new facility in the science park because of the substrate sizes required. Corning officials weren’t available to comment Wednesday. The company is building a plant near a Sharp 10G facility in Japan that’s scheduled to start production in August 2010 using 2.8x3-meter substrate, Abrams said. Sharp originally planned to start 10G production in March 2010 (CED Feb 4 p2). Asahi also supplies glass to AU Optronics and is said to be developing plans for 10G substrates. Samsung also has hinted at opening a 10G or 11G factory, but hasn’t finalized plans, industry officials said.
AU Optronics’ investment in 10G capacity comes as it seeks to raise $1.59 billion to complete construction of an 8.5G plant, Abrams said. AU Optronics has thus far funded the $3 billion project internally, but is expected to go out for a syndicated loan in September that could include some of its existing banking partners, including the Bank of Taiwan and CitiGroup, Abrams said. The 8.5G plant is expected to start production in 2009 with monthly capacity for 30,000 to 40,000 substrates. AU Optronics builds LCDs up to 52W on its 7.5G line, industry officials said. AU Optronics supplies panels to companies including Sharp, Sony and Vizio.