LG Elec in talks to buy 1.5 mln LCD TVs from Taiwan

TAIPEI/SEOUL, Oct 9 (Reuters) - South Korea's LG Electronics (066570.KS) is in talks to buy up to 1.5 million LCD TVs from Taiwanese manufacturers, the company said on Tuesday, as it seeks low-price suppliers in the lucrative but hotly competitive flat-screen TV market.

LG Electronics did not name the companies, but Taiwan media have reported that they were locally listed Qisda (2352.TW), previously known as BenQ, and TPV Technology (0903.HK), which is listed in Hong Kong and in Singapore but has major operations in Taiwan.

Qisda and TPV Technology declined to comment on the reports.

"Nothing has been signed yet, but negotiations are proceeding very positively," an LG Electronics spokeswoman said.

She said one of the negotiations centred on a 500,000 unit order while a separate deal was being discussed for 1 million units.

If successful, they would mark the company's first outsourcing deals with Taiwanese manufacturers and its first for digital TVs.

TV orders from LG could benefit Taiwanese LCD panel suppliers AU Optronics (2409.TW) and Chi Mei Optoelectronics (3009.TW), the Chinese-language Commercial Times said.

Shares of Qisda have been suspended since last week during a capital reduction. TPV shares were up 1.89 percent in Hong Kong on Tuesday while AU Optronics climbed 4.14 percent and Chi Mei rose 2.48 percent. LG Electronics was up 1.65 percent.

In South Korea, the Chosun Ilbo daily reported on Monday that LG had reached a deal for 500,000 sets in the 30- to 40-inch format, while it was still in talks to outsource 1 million smaller TVs in the 10- to 20-inch range.

Local media in Taiwan said that LG's mass orders to the island, a relatively low-cost centre for TV production, could be part of an LG bid to expand its presence in the low-end TV market in North America.

A previously little-known brand Vizio, part of Taiwan's Amtran Technology (2489.TW), has surprised many in the industry by gaining market share in the United States with low-cost LCD TVs sold at retailers such as Costco (COST.O) and Wal-Mart (WMT.N).

A recent Citigroup report said Vizio had grown from a 5 percent share of the U.S. LCD TV market last year to 12 percent in the second quarter, and could grow to 14 percent next year, citing data from DisplaySearch.

"Having taken the market share lead in North America in the second quarter in terms of LCD TV unit shipments, Vizio represents a significant challenge to more established brands," research house iSuppli said in a recent research note.