Taipei, July 1, 2008 (CENS)--Both the top-two thin film transistor-liquid crystal display (TFT-LCD) panel manufacturers in Taiwan, AU Optronics Corp. (AUO) and Chi Mei Optoelectronics Corp. (CMO), recently claimed that they will recoup the major investment made in the past 10 years by the end of the year.

It is estimated that the two panel suppliers together poured over NT$800 billion (US$ at US$1: NT$33.8) into business development in the past 10 years. In addition, the two world-class players almost simultaneously announced their 10th-generation (10G) and/or 11G projects in the past one month, with total investment by the two firms over three years expected to reach NT$600 billion (US$19.67 billion).

Many investors worry that the massive investment would again trap the two panel suppliers in over-capacity, and worse-than-expected investment returns. But L.J. Chen, AUO`s president, said that in terms of cash flow AUO`s investment in the past 10 years has been almost recouped and his company`s accumulated profits have exceeded the total of all counterparts on the island.

During the period from 2000 to 2007, Chen said, AUO reported accumulated earnings of NT$125.8 billion (US$4.13 billion) (compared to CMO`s about NT$75.2 billion, or US$2.47 billion). Plus with the equipment amortization, Chen added, AUO`s EBITDA (earnings before interest, taxes, depreciation, and amortization) has reached NT$327 billion (US$10.72 billion) (CMO is about NT$194.9 billion, or US$6.39 billion).

Some foreign institutional investors estimated that AUO would have net earnings outstripping NT$80 billion (US$2.62 billion) and the company`s equipment amortization is about NT$80 billion to NT$90 billion (US$2.62 billion to US$2.95 billion) this year. That means until the end of the year AUO`s EBITDA would reach NT$487 billion (US$15.97 billion).

CMO is expected to register net earnings of over NT$60 billion (US$1.97 billion), equipment amortization of NT$60 billion (US$1.97 billion), and EBITDA NT$315 billion (US$10.33 billion).

Currently, AUO owns 12 panel plants from 3.5G to 7.5G, and the firm is now planning 8.5G, 10G, plants. In the past 10 years, the firm poured about NT$500 billion (US$16.39 billion) to develop business.

CMO currently operates seven plants and the firm is constructing a 8.5G facility at the Kaohsiung Science Park (formerly STSP Luchu Base), for which the firm invested about NT$350 billion (US$11.48 billion).

(by Quincy Liang)