Taiwan to lift ban on LCD makers in China -paper

TAIPEI, June 24 (Reuters) - Taiwan is planning to lift a ban on local LCD makers producing panels in China in three stages, permitting older sixth-generation LCD plants on the mainland within four years, a local newspaper reported on Tuesday.

The Commercial Times said Taiwan's economics ministry would lift a rule that prohibits local display makers from making seven-inch panels in China as a first step, and then allow them to open 5.5th-generation manufacturing factories there. The ministry plans to allow display makers to open sixth-generation factories in China within four years, but only after Taiwan plants using advanced 8th-generation or higher technology have entered steady mass production for six months, the Chinese-language newspaper said, without quoting sources.

Ministry officials were not available for immediate comment.

The Taiwan government prohibits the display industry from opening manufacturing bases in China, fearing the strategic sector would become too dependent on its political rival.

But Taiwan elected a new president in late March whose party favours closer economic ties with the mainland.

Currently Taiwan LCD makers, including AU Optronics (2409.TW) (AUO.N) and Chi Mei Optoelectronics (3009.TW), are allowed to assemble screen panels and their components in China to reduce costs.

Taiwan has allowed TSMC (2330.TW) (TSM.N) and some other major chipmakers to set up plants in China, where their overseas rivals already enjoy the advantages of cheap labour and proximity to Chinese customers. (Reporting by Baker Li, Editing by Jonathan Hopfner)