Taiwan Lifts "N-1" Ban on Local Firms' TFT-LCD Investments in China

Taipei, March 15, 2011 (CENS)--Taiwan's Ministry of Economic Affairs (MOEA) recently lifted the so-called "N-1" ban on local thin film transistor-liquid crystal display (TFT-LCD) panel manufacturers' investment projects in China, as well as permitting local companies to invest or acquire counterparts there.

Taiwan originally allowed local TFT-LCD makers to invest only in "N-1"-generation ( latest-generation technology facility in Taiwan) panel plants in China.

Industry sources say that only Taiwan's top-two players, Chimei Innolux Corp. and AU Optronics Corp. (AUO), operate sixth-generation (6G)-beyond panel plants locally, with the two to first benefit from such policy change, adding that AUO had won official permission to set up a 7.5G panel plant in China and is expected to soon start deployment, with Chimei Innolux aiming to establish a 8.5G facility in China.

Industrial Development Bureau (IDB) officials say that Chimei Innolux's 8.5G panel plant in Taiwan has begun mass-production turning out 24,000 substrates per month, so is entitled to invest in 8.5G technology in China. But with no more8.5G licenses for foreign firms available in China, IDB officials say local companies are obliged to consider setting up business through holding shares in Chinese counterparts or M&As.

Vice Economics Minster Hwang Jung-chiou says that the government thinks lifting the ban is quite important for local TFT-LCD panel makers to build business in China due to rapidly changing global LCD panel and downstream terminal segments, citing for example sales of flat panel display (FPD) TVs in China will have grown to about 60 million units from 45 million in 2010.

Huang also says that the government fully recognizes that local TFT-LCD panel and parts makers control key technologies and know-how, enabling the “go-west” move to achieve healthier industry development.

The Chinese government granted the last two licenses to Samsung's 7.5G and LGD's 8.5G projects in China, triggering intensive debate in Taiwan over the go-west strategy.