AUO, Innolux to Focus Investment in Taiwan

Both of Taiwan's top-two makers of thin film transistor-liquid crystal display (TFT-LCD) panels, Innolux Display Corp. and AU Optronics Corp. (AUO), are ramping up their investment in Taiwan for the purpose of technological upgrading.

Innolux Display, a subsidiary of the Hon Hai Group and the No. 1 TFT-LCD panel supplier on the island, poured NT$3 billion (US$100 million) into an integrated touch-panel production line in its Southern Taiwan Science Park (STSP) plant last year. The firm's chairman, Duan Xingjian, said that his company intends to further upgrade its production efficiency, create new jobs in Taiwan, and keep talented personnel on the island.

K.Y. Lee, chairman of the BenQ-AUO group, previously reported that AUO would expand its investment in Taiwan, not China, and that the company plans to keep production of all value-added products on the island.

To deepen its manufacturing roots in Taiwan, Innolux recently signed cooperation agreements with four local vocational schools with the aim of cultivating automation-related talent in the educational system. In addition, the company tied up with Japan's globally-leading automated robot-arm maker Epson Robots to set up Asia's first automation laboratory.

According to Innolux, automation has changed the operating mode of panel makers. The Taiwanese panel supplier has integrated the production of TFT-LCD panels, rear-section modules, and touch modules into one production line; its investment in STSP in 2013 alone surpassed US$100 million, creating about 3,000 new jobs. The integrated production line has effectively upgraded Innolux's profitability and helped form an optoelectronics industry cluster in the STSP, according to company executives.

Industry sources said that in the past Taiwanese panel suppliers turned out most of their LCD modules (LCMs) in China; Innolux alone has five LCM factories on the other side of the Taiwan Strait, where they employ more than 60,000 workers. However, the increasingly severe labor shortage in China has been driving major Taiwanese enterprises to return their operations to the island.

Duan claimed that re-industrialization is the best way to solve labor-shortage problems in the manufacturing industry. Innolux's new integrated and automated production line in the STSP began mass production in 2013, and currently focuses on manufacturing touch panels for bigger-size Win 8 applications as well as Touch on Display (TOD) embedded touch panels for smartphone and tablet PC applications.

AUO is also intensively evaluating the feasibility of putting its investment focus on Taiwan, and preliminary details are expected to be announced in 2015. Chairman Lee said that his company has been increasing its investment on the island in recent years, and will not further expand investment in China in the future. To match the group's transition toward high-value-added sectors such as medical instruments, AUO and its affiliates are planning for the next phase of business development.

AUO also plans to move the production of some high-end panel models back to Taiwan, including front- to rear-section modules for 65-inch TV panels.

TFT-LCD Production Sites of AUO, Innolux (Taiwan & China)
Innolux	Taiwan	Zhunan: 3.5G, 4.5G, 5G and 6G
		Tainan: 3.5G, 4G, 5G, 5.5G, 6G, 7.5G, 8.5G
	China	LCM factories in Shenzhen (Guangdong Province), Ningbo (Jiangsu province), Nanjing (Jiangsu Province), Shanghai
AUO	Taiwan	Hsinchu: 3.5G
		Taoyuan: 3.5G, 5G
		Longtan: 4G, 5G, 6G
		Central Taiwan Science Park (CTSP): 5G, 6G, 7.5G, 8.5G
	China	LCM factories: Suzhou (Jiangsu Province), Songjiang (Shanghai), Xiamen (Fujian Province).
Source: The companies