Taiwan’s top panel manufacturer of thin-film transistor liquid crystal display panels (TFT-LCD), submitted an application on 15 March to the government confirming its plan to build a 7.5-generation plant in eastern China. The company will open a solar factory in Taiwan late this year to save money and increase competitiveness in a growing industry. It will thus become the first Taiwanese LCD maker to take advantage of its own country’s lifting of the ban on building TFT-LCD fabs in China.

The Taiwan-based firm’s wholly owned AUO Crystal Corp. plans to spend US $1.2 billion initially; the total investment will be about $3 billion. It will begin by processing 60 000 glass substrates a month, with capaci0ty eventually topping out above 90 000 substrates per month.

AU Optronics expects the factory to create 1,000 jobs in three years.

A 7.5-gen fab turns out a glass substrate 1950 x 2250mm—big enough for manufacturers to cut it up into eight 42-inch panels, six 46-inch solar panels, or three 55-inch panels. These specifications fit the Chinese market, which consistently favours screens measuring 42 inches and up.

In terms of revenue, AUO is the world’s third-largest flat-panel maker after Samsung Electronics Co. and LG Display Co., both of Korea. Taiwan’s decision to ease restrictions on its own companies’ investments in China was a defensive response to the aggressiveness of competitors in China in 2009.

AU Optronics, better known for its liquid crystal display panels, won’t profit right away from the factory, but it should see returns by 2013 and make a dent in the market said Sebastian Ho, an analyst with Yuanta Investment Consulting in Taipei.

“They have a competitive advantage because their research and development isn’t bad and they’ve got plenty of capital,” Ho said.

AU Optronics reported sales revenue of US$16 billion last year.