Business booming since Taiwan relaxed cross-strait law

AUO has been given the green light by Taiwanese authorities to make a splash in the flat panel industry across the Strait in China.

The Investment Commission, under the guidance of the Ministry of Economic Affairs, has approved a merger with Kunshan Long Fei Opto-Electronics Co.

AUO will spend $796 million in order to grab a 49 percent stake in Long Fei which will give the Taiwanese firm access to an 8.5G flat panel display factory, enabling a greater presence in the Chinese market.

AUO, alongside Chimei Innolux, has made appeals to the Taiwanese authorities in the past to allow for greater access to the Chinese market, with restrictions gradually being relaxed over the past months.

The go-ahead from domestic authorities for the Long Fei deal will be good news for AUO, which, despite only a 49 percent share, will be handed management of the plant.

AUO had originally hoped to obtain a license to construct a 7.5G plant in China, but was unable to gain a place in the competitive high-generation Chinese flat panel sector.

There have so far been only five 7.5G and 8.5G plants given licenses, with BOE, CSOT, Samsung, LG, and of course Long Fei.

So in order to gain a place among the in-crowd it makes sense for AUO to buy its way into the group.

With the considerable experience that AUO has in its domestic market with two 8.5G plants, it is thought that AUO will have an edge on its Chinese competitors.

Both BOE and CSOT have not produced panels at that level before.

While AUO may have rather have its own self owned plant at first, the sub $800 price tag to make the jump across the water is in any case less than the $3 billion estimated cost to build.

It is thought that the plant will become operational in 2013.

Just a quick glance on the Taiwan Economic News homepage reveals further benefits to the relaxed law.

The massive Wintek has teamed up with the Chinese Tianma to pair on OLED panels. Tianma is the largest supplier of small/medium sized LCDs in China. 

Although Taiwan has long supported WiMAX, business proposals are flooding in from the mainland about working together on TD-LTE, both in manufacturing and on marketing. Commentators believe now is the time to capitalise on the burgeoning market. CENS says China Mobile and Far EasTone launched a TD-LTE testing centre, together, in Taipei recently. China Mobile is top of its game in China, and there will be plenty of business on both sides of the Strait for technology testing to flourish.

Meanwhile Taipei has opened its doors to the first lot of Chinese free independent travellers, who will arrive in the country late June for the tour. It’s expected that the travellers will bring with them significant economic benefits, not to mention plenty of business opportunity.