On August 20 2010 AUO and Wistron announced the establishment of a joint venture for  TFT LCD panel module manufacturing in Zhongshan, China. Total investment in the JV, tentatively named Zhongshan BriVision Optronics Corporation, is expected to be limited to $10 million; AUO will own 51% and Wistron will hold 49%.

This is the latest in a series of tie-ups between TV set makers and panel makers, which have the goal of better supply-chain integration in LCD module and LCD TV manufacturing. For TV makers, integration of LCM manufacturing with TV production can increase the value they can add, secure stable panel supply, and enhance cost competitiveness through qualified supply capability and optimized logistics. A strategic partnership with panel makers for stable cell supply and panel technology is essential for TV OEM makers. The same is true for LCD panel makers; such partnerships can diversify their customer base and provide in-time and value-added services for their customers, particularly with strategic TV brands. Normally, panel makers take the majority ownership in these partnerships, given the investment and value they provide.

As reported in the DisplaySearch Quarterly LCD TV Value Chain Report, Wistron is the #7 LCD TV OEM maker worldwide in Q1’10, with a manufacturing presence in China, Mexico and the Czech Republic. Wistron has a long and well-established TV OEM business with Sony, which has more than 80% of its production. Wistron also makes sets for Toshiba and Best Buy. As we reported recently, Sony may outsource 80% of LCD TV assembly in 2011. Following its acquisition of Sony’s factories in 2010, Foxconn passed Wistron as the leading supplier to Sony; with the creation of Chimei Innolux as part of the Hon Hai Group, Foxconn can now utilize internal panel sources for their LCD TV production. This joint venture is one way for Wistron to compete for business from Sony, as well as other global brands.

However, Wistron may find that they do not have exclusive access, as AUO has formed several LCM manufacturing companies, including Briview (an affiliate of AUO), as well as joint ventures with TPV, Chang Hong, and Haier. The motivation for AUO to ally with Wistron could be to win more Sony business. In Q1’10, 8% of AUO’s TV panels were shipped for Sony. Most TV brands control panel procurement. But in 2010 Sony began to let some TV OEM makers source panels. This shift in power could change supply relationships, and as a result, a Korean panel maker that is eager to rebuild its business with Sony has shown interest in working with Wistron in the LCD module partnership.