Mega merger creates LCD giant

By Simon Burns on Oct 4, 2006 10:06 AM
Filed under Hardware

Taiwanese authorities approve marriage of AU Optronics and Quanta Display.

Shareholders and regulators in Taiwan have approved a merger which will form one of the world's largest LCD makers.

AU Optronics announced today that its merger with Quanta Display is now officially complete.

Following the merger, AU Optronics will produce more large-sized LCD and notebook LCD panels than any other firm, the company claims. Large-sized panels are defined as having a diagonal of 10in or more.

AU Optronics will hold almost 21 percent of the large-sized panel market and more than 25 percent of the notebook panel market, according to historical unit sales data compiled by DisplaySearch.

The firm will also become one of the top three players, based on unit sales, in several other markets, including LCD TV panels, LCD monitor panels and digital camera LCD displays.

Previously, AU Optronics had ranked amongst the top five global manufacturers in these sectors.

The new company will employ 42,000 worldwide. To prepare for the merger, Quanta Display laid off 1,400 of its 14,000 staff last month.

"AU Optronics and Quanta Display complement one another in their strengths, ushering in the arrival of a new era," said AU Optronics chairman K Y Lee.

"The post-merger AU Optronics will be better able to utilise its resources and R&D talent to strengthen its leadership in the global TFT-LCD industry. "

However, with the display market dominated by major manufacturers like Samsung, and technology leaders like Sharp, consolidation among Taiwan's LCD makers was inevitable, industry observers say.

In the increasingly competitive display market, LCD makers that lack advanced technology or economies of scale have suffered negative profit margins and struggled to survive recently.

AU Optronics executives recently told analysts that they are slowing down plans to introduce more advanced LCD technology, and will instead focus on cutting production costs.

The manufacturer reported revenues of US$703m last month, an increase of 15.7 percent compared to a year earlier.

AU Optronics does not sell LCD panels under its own name, but supplies them to other manufacturers which incorporate them into products.

AU Optronics' major customers have included BenQ, HP, Wistron, Philips and Toshiba. Like AU Optronics, Benq and Wistron are affiliated with Taiwan's giant Acer group.