AU, Quanta to keep capital expenditure plans

AU Optronics Corp., the world’s third largest LCD (liquid crystal display) screen maker, does not plan to change its capital spending plans for this year despite its purchase of Quanta Display Inc., a competitor in Taiwan.

AU Optronics, the world’s third-largest LCD screen maker, does not plan to change its capital spending plans for this year despite its purchase of Quanta Display, a competitor in Taiwan.

“We won’t change the capital spending plans at either company,” said Max Cheng, chief financial officer at AU, speaking on the sidelines of a news conference on Thursday.

AU expects its capital spending to reach NT$90 billion (US$2.8 billion this year, mainly as it increases production at a new LCD factory in Taiwan). Last year, the company spent NT$87 billion on new production equipment and factories. Quanta Display has said it will spend NT$15 billion this year, mainly to upgrade existing facilities and increase production at a plant.

The acquisition of Quanta Display in an all-share transaction, valued at around US$2.2 billion when it was announced earlier this month, transformed AU Optronics from a distant threat to its main competitors in South Korea to one of the industry’s largest companies.

But it also added worries the company may be taking on factories from Quanta Display that it doesn’t really need. Most LCD companies today are building advanced plants aimed at producing large screens for LCD TVs. But Quanta Display has a few older factories that aren’t as efficient at producing such screens.

“We need to increase our production of smaller-sized screens for products such as mobile phones,” said H.B. Chen, the president of AU, during the company’s first-quarter investors’ conference on Thursday, explaining how the older plants would be used.

Analysts say the need for mobile phone screens has likely been caused by the recent purchase by AU’s sister company, BenQ, of Siemens AG’s mobile phone division. The new mobile phone company resulting from the purchase, dubbed BenQ Mobile GmbH & Co. OHG, will source LCD screens from AU, they said.