Shares of AUO sharply higher on news of alliance with HTC

The market has embraced high hopes that AUO will become the second panel maker after Samsung Electronics Co. to churn out AMOLED screens to boost its competitive edge in the global flat screen market, they said.

AU Optronics rose 1.46 percent to close at NT$9.70 the end of the session.

According to the media report, AUO and HTC have set up a partnership to develop 4.3 inch AMOLED screens, and the smartphone vendor aims to use the panel as its secret weapon to compete with its rivals.

AUO said it does not comment on any specific customer, while HTC declined to comment on the market speculation.

Local media had previously reported that AUO was working with Sony to develop AMOLED panels.

“To my knowledge, AUO will launch AMOLED panels later this year. It is likely for the company to work with smartphone suppliers, such as HTC, to ensure sales,” Grand Cathay Securities analyst Jeff Chang said.

Separately, the local bourse came under pressure and fell below 7,400 points yesterday amid lingering concerns over the global economy after the U.S. reported a contraction in its manufacturing activity in August, dealers said.

Selling was seen almost across the board amid cautious sentiment toward the economic fundamentals, while the construction sector outperformed the market to close higher on expectations that rising consumer prices will promote investors to buy property assets to fight inflation, they said.

The weighted index closed down 83.91 points, or 1.12 percent, at 7,367.44, after moving between 7,364.68 and 7,429.93, on turnover of NT$72.45 billion.

The market opened down 0.29 percent on a knee-jerk reaction to Wall Street's weakness overnight, and selling escalated as investors took cues from declines in share prices on other regional markets, such as Hong Kong, Tokyo and Seoul, as the disappointing U.S. data weighed on the markets, dealers said.

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