AUO Chairman and CEO Paul Peng applauded Taiwan’s Ministry of Economics Affairs (MOEA) plan of vertically integrating the country’s OLED supply chain, but cautioned the Taiwanese government needs to implement concrete measures and follow through, during the opening ceremony of Touch Taiwan 2016.

MOEA announced earlier this month it would invest about US $ 3.21 billion in the country’s OLED industry to build a comprehensive national supply chain.

AUO Chairman and CEO Paul Peng introducing the company's 8K4K display. (Photo courtesy of TechNews)

Responding to this development, Peng, who is also the chairman of Taiwan Display Unit Association (TDUA), urged the government to follow through on its OLED project, and asked the government to lift certain financing regulations.

Domestically, Taiwan’s panel industry ace funding issues, said Peng. There are many limitations placed on company bonds issuance process, in addition financial regulations cap loan applications from a single bank at 15% of the company’s net value, he said. Moreover, local banks can only lend a maximum of 15% of finances allocated to a single industry.

To illustrate the last regulation, if a panel manufacturer needed a loan of US $ 3 billion, and the bank’s loan quota for the panel industry is set at US $10 billion, the manufacturer would only receive US $1.5 billion from the first bank, and finance the remaining loans by applying with other banks.

According to LEDinside’s understanding, the stringent financing regulations are applicable in three major industries in Taiwan including DRAM, panelmakers, and the construction industry.

These financing limitations in Taiwan’s capital market make it difficult for panel manufacturers to expand production capacity, said Peng.

Innolux Chairman and CEO Jyh-Chau Wang, also pointed out the lack of financial subsidies from Taiwanese government has made it difficult for local OLED panel manufacturers to compete with Chinese and Korean vendors, and are lagging behind in technology and production capacity, reported Nikkei Asian Review.

The rise of China’s display industry is also a threat to Taiwan’s panel industry. Chinese display vendors have been expanding production capacity, leading to intense market competition, and low retail prices, said Peng. Yet, Taiwan’s panelmakers have been in the market far longer than Chinese counterparts, and have better market relations, technology, and added value applications.

The issue is developing effective government policies to vertically integrate manufacturers, and assist local companies developments in niche markets. For instance, AUO is developing professional gaming monitors to compete against Chinese manufacturers’ large volume of entry-level products in the general market.

Flexible AMOLED will be a key to the next generation of developments in Taiwan’s panel industry, said Peng. AUO for instance has filed more than 700 AMOLED patents, with 400 being flexible AMOLED patents. AMOLEDs will play an important role in the future of Taiwan’s display market, due to the displays properties of being flexible, thin, and capacity to revamp appearances of wearable devices in high-end applications.

Touch Taiwan 2016 is a display exhibition hosted by TDUA that runs from Aug. 24-26, 2016 at Nangang Exhibition Center in Taipei, Taiwan.