Electronics Production | April 11, 2006
AUO/Quanta Merger Produces Potential Number One in TFT-LCD
The merger between AU Optronics Corp. (AUO) and Quanta Display Inc. will create a large-sized TFT-LCD panel supplier whose market share potentially could exceed that of market leaders Samsung and LG.Philips LCD, according to iSuppli Corp.
Taiwanese LCD panel makers AUO and Quanta last week announced their agreement to merge by October of this year. After the merger is completed, the combined company will operate under the AUO name. AUO said the deal should ensure its leadership position in the large-sized TFT-LCD industry. The company also said it hopes the merger will allow it to garner more capital investment in Taiwan. The announcement comes at a time when large-sized TFT-LCD demand has been weak, and when panel prices have been declining every month-occasionally even multiple times within a month. These panel price reductions are expected to put pressure on revenue and profitability for TFT-LCD suppliers, especially the second-tier panel makers. The most immediate and obvious impact of the merger is an increase in market share for AUO, putting it above Samsung and LG.Philips LCD, the top-two panel suppliers in the industry, based on iSuppli's market share information for the fourth quarter of 2005. "AUO has been maintaining the number-three position in the large-sized TFT-LCD industry for at least two years," said Sweta Dash, director of LCD and projection research for iSuppli. "The merger has improved AUO's chances of competing for the number-one position in the large-sized TFT-LCD panel market in the future." Combining the unit market shares of AUO and Quanta in the fourth quarter of 2005, the merged company would account for 20.6 percent of unit shipments, putting it slightly ahead of Samsung at 20.26 percent and LG.Philips LCD at 19.74 percent. The table below and attached presents iSuppli's estimate of large-sized TFT-LCD unit market share in the fourth quarter of 2005, combining the results of AUO and Quanta.
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