AUO will build New Gen 8.5 line

   AUO, a major panel manufacturer, held a legal meeting on February 11. Chairman Peng Shuanglang announced that AUO will build a new factory in Taiwan within ten years. In response to the demand for high-end panels after 2025, CFO Zeng Yuzhi revealed that this year's capital expenditure will reach NT$45 billion, an annual increase of 1.64 times.

  It has been more than ten years since AUO last expanded its factory in Taiwan. Peng Shuanglang said that the last time AUO built a new 8.5-generation factory in Taiwan was from 2008 to 2010. It was expanded and stationed in multiple stages. Therefore, the overall factory space did not increase until last year. Fully loaded, AUO has only made new investments in Kunshan, Jiangsu in the past ten years.

  Regarding the planning of the new factory, Peng Shuanglang said that the initial focus will be on high-end IT panels, which will become an opportunity for AUO to expand the market share of high-end notebook and display panels in the future. The construction of the new plant will be mainly based on civil engineering and electromechanical engineering, of which 5 billion yuan will be implemented this year, and the equipment will be budgeted in stages and according to market demand.

  Peng Shuanglang further stated that it is currently estimated that the new plant will be mass-produced after 2025 at the earliest. Taking an 8.5/8.6-generation wire plant as an example, the total capital expenditure from civil construction to mass production will fall about NT$100-150 billion.

  Ke Furen added after the meeting that the process platform of the new factory is still under planning, but initially it will be based on a-si technology and extend LTPS upwards. It is not ruled out that Mini/Micro LED products will be added. High-value products such as chemical, high-value, curved surfaces, and narrow bezels are the main products. As for overseas factories, there are still many international variables and they are still in the evaluation stage.

  However, the market is worried that the panel industry may be oversupplied again in the future. Ke Furen said that in the future, the overall production capacity of the industry will not only increase but also will be withdrawn. According to Peng Shuanglang's analysis, investment in new panel production capacity will be the peak in 2014-2019. Affected by the war and the epidemic, governments of various countries have shifted their finances to subsidizing semiconductors or people's livelihood economy in recent years. In addition, the structural changes in the panel industry have taken shape, so the overall industrial investment in the future will return to rationality.

  Peng Shuanglang emphasized that from a regional perspective, LCD panel production capacity was distributed in Japan, South Korea, Taiwan, and mainland China. Taiwan will account for about 20%. In terms of capital expenditures, Zeng Yuzhi said that capital expenditures in the fourth quarter of last year amounted to about NT$5.4 billion, and fell to NT$17 billion for the whole year, but some capital expenditures will be deferred to this year due to different recognition times. This year's capital expenditure will greatly increase to NT$45 billion, an annual increase of 1.64 times, while depreciation will be the same as last year, reaching about NT$33.5 billion.

  In terms of dividend policy, AUO pointed out that it will make an announcement after the board of directors has finalized the decision, and promised to share the results of last year's operation with shareholders.