Posted by: Bruce Einhorn on November 16, 2009
Samsung and LG, the world’s biggest producers of TFT-LCD panels, may finally be getting some more serious competition from Taiwan. The island’s overcrowded LCD industry has just taken one big step toward consolidation, and there may be more moves soon. Over the weekend, Chi Mei Optoelectronics, Taiwan’s second-biggest LCD maker, was acquired by Innolux Display, a smaller rival that’s controlled by outsourcing giant Hon Hai. The combined Chi Mei-Innolux will be the biggest panel maker in Taiwan, jumping ahead of AU Optronics.
Now it’s the turn of AUO (itself the product of an earlier round of consolidation) or the Koreans to make a move. Speculation is focusing on Chunghwa Picture Tube, one of the remaining smaller players in the Taiwanese market; according to this report in the China Economic News, “Samsung is eyeing CPT, one of its suppliers, since it can help the Korean firm penetrate the huge Chinese market, taking advantage of its manufacturing facilities in China and its close link with Chinese brands. Korean makers` interest in Taiwan`s TFT LCD firms was underscored by their courtship for Chi Mei, according to the statement of Shi Wen-long, founder of Chi Mei, during the press conference for the acquisition of Chi Mei by Innolux last Saturday.”
It will be especially interesting to see how AUO responds. I was at the company two weeks ago and interviewed C.T. Liu, chief of the company’s consumer display business. (See my recent BW story on Taiwan’s tech sector for more.) He emphasized how AUO was trying to get away from relying on huge, capital-intensive factories. “We used to be a heavily invested in TFT-LCD [production],” he told me. “Now AUO is going in a completely different direction.” He summed it up with the acronym SELECT, with each letter standing for a different direction: Solar; Energy service; Lighting; E-paper; Cars; and TFT-LCD.
We’ll now have the chance to see how committed AUO is to this new strategy. Will the company sit back and allow Hon Hai to become tops in Taiwan? Or will AUO try to regain its No. 1 position by going after CPt or another smaller rival? And will AUO be willing to allow Samsung to take over a Taiwanese rival and gain a better foothold in China?