AUO to sell 2 plants to Micron Taiwan for NT$8.1 billion

Taipei, Aug. 28 (CNA) AUO Corp., a leading Taiwanese flat panel maker, has agreed to sell two plants to the Taiwan unit of U.S.-based dynamic random access memory (DRAM) chip supplier Micron Technology Inc. for NT$8.1 billion (US$254 million).

In a statement, AUO said Tuesday that under a purchase and sale agreement (PSA), it will sell one 32,500-square meter plant in Taichung for NT$700 million and another 146,033-square meter plant in Tainan for NT$7.4 billion to Micron.

The deal, expected to be completed by the end of the year, came after Innolux Corp., another Taiwanese flat panel supplier, signed an agreement on Aug. 15 to sell a plant in the Southern Taiwan Science Park along with equipment to Taiwan Semiconductor Manufacturing Co. (TSMC) for NT$17.14 billion.

AUO said the sale was aimed at optimizing the use of its property and improving its financial structure.

According to AUO, the transaction is expected to result in a profit of more than NT$4.7 billion. The market has estimated the deal will contribute about NT$0.6 in earnings per share to AUO this year.

AUO said it gradually shut down production lines in the Tainan plant beginning in 2023 and reallocated production to other facilities and had now decided to dispose of the property and use the proceeds as operating capital.

The flat panel company said it will continue to focus on three major business pillars: mobility solutions, display solutions, and vertical solutions, which AUO defined as integrating core display technologies with the Artificial Intelligence of Things (AIoT).

In response to the deal, Micron Taiwan said the company will transform the Tainan plant into a wafer testing facility to support its growing DRAM production in Taichung and Taoyuan.

The company said it regularly reviewed and adjusted its global manufacturing strategy, and that its Taiwan operations would satisfy the growing demand seen in the artificial intelligence age and cement its lead in the global DRAM market.

TSMC said its acquisition of the plant and equipment from Innolux was aimed at meeting its day to day operations.

Ray Yang (楊瑞臨), an international strategy development consulting director at the government-sponsored Industrial Technology Research Institute (ITRI), said TSMC acquired Innolux's plant to develop fan-out panel level packaging (FOPLP) IC packaging technology, which is more advanced than standard wafer-level packaging (WLP).

Amid competition from its rivals such as Intel Corp. and Samsung Electronics Co., Yang said, TSMC has intensified its efforts to develop advanced IC packaging technology, and he expected TSMC's FOPLP technology efforts to pay off in three years.

Industrial sources said they did not rule out TSMC teaming up with Innolux in developing the advanced technology as TSMC's research and development team has met with the flat panel supplier's R&D personnel.

For Micron, Yang said, the factory acquisitions showed that it is using Taiwan as its DRAM production hub and that more investment was necessary.