The Taiwan market is buzzing with rumors that LCD panel maker AU Optronics (AUO) will announce a merger with Chunghwa Picture Tubes (CPT) on Friday, December 4, 2009. AUO has responded to the rumors by stating the company remains open to mergers or strategic partnerships with other companies, but currently has no plan to do so.

Despite CPT's financial woes, AUO may still want to take over the second-tier rival in order to achieve quick expansion in both capacity and market share in the face of growing competition from Chimei Innolux Corporation - the new entity to be formed after Innolux Display and Chi Mei Optoelectronics (CMO) merge, market observers have speculated.

A merger with CPT would make AUO the largest panel maker in Taiwan in terms of capacity, but the addition of CPT's production lines may not result in significant changes to the company's operations, the observers commented.

CPT currently has four LCD lines - one 6G, two 4.5G, and one 4G. The company has been shifting its production towards the notebook and small- to medium-size segments. CPT shipped 5.2 million large-size panels and 43.8 million small- to medium-size panels in the third quarter of 2009.

Other rumors have claimed that AUO is also talking to other companies including Compal Electronics, Quanta Computer and Wistron, seeking closer collaboration to counter the growing dominance of Foxconn Electronics (Hon Hai Precision Industry).
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