UPDATE 1-AU jumps after iPad 2 order report; analysts cast doubts

* AU could sell 30 mln panels for iPad 2 at 3-4 times higher

* AU lacks the technology licence to produce panels for iPad

(Adds analyst comments)

TAIPEI, March 31 (Reuters) – Shares in Taiwan’s AU Optronics
Corp jumped as much as 6 percent on Thursday after a
report that the world’s No.4 LCD maker has won an order to
provide flat panel screens for Apple Inc’s hot-selling
iPad 2 tablet.

Taiwan’s Economic Daily News, citing no sources for its
information, said the panels’ selling price will be three to
four times more than regular panels of the same size, giving a
big boost to AU’s profit.

AU could ship 30 million of the screens in a year, it said.
The order will take up over half the capacity of its plant in
Taichung, central Taiwan.

AU declined to comment.

Analysts however cast doubt on the ability of AU to produce
iPad 2 screens, which are based on a different technology than
it currently uses and would require a patent authorisation that
AU does not have.

“I think the credibility of this news is only at 30-40
percent, mainly because of the patent authorisation for the
technology,” said Wayne Cheng, an analyst of Primasia

If AU, which is currently using MVA technology for its
panels, is to make the panels for the iPad 2, it first needs to
get authorisation for the IPS technology from patent holders
Hitachi and Sharp of Japan and South Korea’s
LG Display , according to analysts.

Other companies that use IPS include Samsung and
Taiwan’s Chimei Innolux .

MVA and IPS refer to technologies for viewing angles and
colour reproduction in liquid crystal displays.

“It takes at least six months to one year to apply for the
patent authorisation, and it also takes time to convert a fab to
use the new technology,” said an analyst from a foreign
brokerage, who asked not to be identified as he is not
authorised to speak to media.

“So it’s quite impossible for AU to produce for iPad 2 this

Analysts also think it is impossible for AU to win over half
of iPad 2 orders. Sales of the new tablet this year are seen at
around 50 million units.

“The shipment figure also looks bloated. Apple always
diversifies its suppliers to avoid the over-concentration risk,”
Cheng said.

AU shares were up 4.7 percent at T$25.65 at 0258 GMT after
having risen to as high as T$26.05.

Analysts forecast some 1 million iPad 2s may have been sold
in the first weekend of its launch in the United States on March
11. The device went on sale in 25 markets in Europe, Australia
and elsewhere on March 25, drawing long queues outside stores.

(Reporting by Jonathan Standing and Clare Jim)

UPDATE 1-AU jumps after iPad 2 order report; analysts cast doubts