AU Optronics (AUO), Taiwan's No 1 and the world's third largest maker of TFT-LCD panels, has set up a Shanghai subsidiary to tap the rising LCD TV panel market in China.

The firm will invest US$1 million building the Shanghai branch, which will be responsible for panel sales on the Chinese mainland, said Hsiao Yawen, a communication official from the company.

"We decided to open the subsidiary in Shanghai as our clients on the Chinese mainland are increasing," she said.

But she played down the role of the subsidiary company, saying its major task was sales and trade, not marketing. She said the firm had no big business plan.

Taiwan LCD makers have stepped up their operations on the Chinese mainland, but none officially admit this.

AUO has a LCM plant in Suzhou, which has a monthly capacity of over 1 million units.

Longteng Optoelectronics, backed by Taiwan investment, is about to complete the first phase construction of the mainland's third fifth-generation LCD plant.

And Chi Mei Optoelectronics (CMO), another large Taiwan LCD marker, has decided to set up a LCD module plant on the mainland.

The Chinese Government has allowed CMO to invest US$1 million to open a company in the eastern city of Ningbo to serve its clients.

Statistics from DisplaySearch, the industry's leading market research and consulting company, show that LCD TV sales in China shot up 400 percent in the first quarter from a year earlier, and soared 55 percent from the previous quarter, the highest sales growth rate in the world.

About 200,000 LCD TVs were sold in China in the first quarter of this year, accounting for 6.4 percent of the global market.

Analysts believe the Chinese mainland has the largest potential as it is currently the world's largest cathode-ray tube (CRT) TV market and demand for LCD TVs will be extremely strong as people replace their CRT TVs .

Prices for LCD TVs will continue to drop to a level acceptable to mainland consumers with the development of LCD panel technology.

Last year, 229,000 LCD TVs were sold on the Chinese mainland, up 184 percent from 2003, according to market research house CCID Consulting.

(China Daily July 28, 2005)