The Taiwanese company's $3 billion project is viewed as vital to helping the island maintain a competitive tech edge over South Korea.
AU Optronics has been granted approval by the Taiwanese government to begin a $3 billion project to manufacture television and computer display panels in China.
The approval came after nine months of deliberation and is expected to help the island maintain a technology edge against growing competition from South Korea.
The generation 7.5 liquid crystal display panels, which are one generation behind the current technology used in Taiwan, will be made by Au Optronics in a factory in eastern China, near Shanghai, where there are lower wages and production costs, the Investment Commission said, The Associated Press reported. The factory is expected to open in 2012.
The project got the green light on Friday on the heels of similar announcements by the world's two largest LCD panel makers, Samsung Electronics and LG Display, to invest in China. The country is a significant market for panels that are used in flat screen televisions and computer monitors.
AU Optronics will also build two factories in Taiwan to make generation 11 panels and employ at least 5,000 new workers in the next 10 years on the island, the Investment Commission said, according to the AP. The company supplies LCDs to Dell, Sony, and Hewlett-Packard Co.
The investment approval Friday comes a week after a Taiwanese business tycoon said that further halts on panel projects in China could seriously prevent the local industry from maintaining a competitive edge over South Korea. Chimei Innolux of Taiwan, whose investors include Foxconn Technology Group, said that like AU Optronics, it too will invest in China, The AP reported.
It has been a difficult year for display panel makers in Taiwan, who have been fined heavily by both the U.S. and Europe for participating in a price fixing cartel with two South Korean companies.
LG Display and four Taiwanese panel makers were fined euro 649 million ($863 million) by the EU for fixing LCD panel prices. AU Optronics said it is planning to appeal its fine and Chimei has not yet decided on a course of action, The AP reported. Samsung was part of the cartel but did not get fined after it agreed to cooperate with EU authorities.
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