AUO secures 5G CF supply for QDI merger by investments in Toppan CFI (Taiwan)

By becoming the second-largest shareholder of Toppan CFI (Taiwan), a color filter (CF) maker and Taiwan-based subsidiary of Japan-based Toppan Printing, AU Optronics (AUO) will secure the fifth-generation (5G) CFs needed by itself and Quanta Display (QDI), which will soon be merged into AUO, according to HB Chen, president, COO and spokesperson of AUO.

Since QDI’s current in-house CF supply is not enough for QDI’s use and AUO also needs to expand its CF supplier portfolio, AUO will invest approximately NT$6.1 billion (US$186 million) by buying shares from Toppan CFI (Taiwan) at NT$10 per share, with the transaction to be finalized before the end of August, Chen said, adding that Toppan CFI (Taiwan), which currently holds more than an 80% stake in the company, will remain the largest shareholder.

In around nine months, Toppan CFI (Taiwan), Allied Material Technology Corporation (AMTC), the third largest shareholder of Toppan CFI (Taiwan) with a single percentage share, Cando, an affiliate of AUO, and AUO’s in-house CF production will support over 90% of AUO-QDI's CF needs, Chen indicated.

Toppan CFI (Taiwan)'s 5G CF line are running 80,000 glass substrates per month now, sources said.

AUO’s three 5G TFT LCD lines had a combined monthly capacity of 180,000 substrates in June and the capacity will be increased by 60,000 units by this December. QDI will see its 5G TFT LCD capacity at 70,000 units in December, according to a presentation of AUO’s second quarter results.

In an agreement with Toppan Printing, two board members of Toppan CFI (Taiwan)’s boards of directors and CFO will be appointed by AUO while Toppan Printing will appoint the chairman and president, an AUO press release stated.

AUO will finalize its choice for the directors and CFO before the end of this month, Chen said.

The panel maker may consider increasing its investment in Toppan CFI (Taiwan) in the future, but the percentage will not exceed 49% while Toppan CFI (Taiwan) will remain the major shareholder in itself, Chen indicated.

Cando, an affiliate of AUO, will keep supplying AUO with 4.5G-and-under CFs for small- to mediums-size panels, Chen said.

Last December, AUO signed a five-year 5G CF contract with AMTC, with half of the 5G capacity of AMTC having been booked by AUO and the other half to be shipped to Toppan printing, which collaborated with AMTC on developing its 5G CF technology, sources said.

AUO will officially merge with QDI in October of this year.