AU Optronics (AUO) has informed equipment manufacturers that it will delay G7.5 equipment installation from the fourth quarter of 2007 to 2008. Although AUO denies revealing any schedule delays for its G7.5 plant, L7B, equipment suppliers are stating that AUO will most likely take a wait-and-see approach in 2007. AUO is also reportedly evaluating the competitiveness of G7.5 versus G8 and contemplating converting the plant to G8. AUO’s first G7.5 plant, L7A, entered volume production in October 2006 with an initial glass substrate input capacity of 10,000 per month in the fourth quarter of 2006. Phase 1 of L7A will hit 30,000 input capacity most likely within the first half of 2007. Chi Mei Optoelectronics (CMO) has also delayed its G8 plant construction. CMO’s G8 will not enter mass production until 2009.
It is always a gamble when capacity expansion is delayed. With Sharp and Samsung moving ahead with G8, the 50″ and larger market will be monopolized by the two companies from 2007 on. LG.Philips LCD (LPL), AUO and CMO will need to compete at the 40″-49″ level at best. But, Samsung and Sharp has fabs to compete in that space as well. There is always a first mover advantage: know-how buildup, equipment depreciation, supply chain efficiencies, etc. With this news, AUO will be relegated to a top second tier supplier of LCDs in the very near future, joining LPL.