AU Optronics, a leading Taiwanese flat screen manufacturer, said Monday it plans to spend three billion US dollars building a new plant in China as it looks to tap into the huge mainland market.
The announcement follows Taiwan's relaxation of restrictions on flat screen and microchip investment in China in February amid improving ties.
AU Optronics is planning on building an advanced, so-called "7.5 generation" plant in Kunshan, eastern Jiangsu province, meaning that it could make liquid crystal displays larger than 40 inches. Production is slated to start in 2011.
"We are glad to take advantage of the new China investment rules. The Kunshan plant is expected to help the company to get closer to its customers in that area," company spokeswoman Hsiao Ya-wen said.
Under the new rules, Taiwan's LCD makers are allowed to invest in "sixth-generation" and higher technology facilities on the mainland, on condition that they keep more advanced technologies at home.
AU Optronics' "8.5 generation" plant in Taiwan produces 50-inch panels.
Calls for easing controls on investment in the mainland have mounted among Taiwan's high-tech businesses, who argue that their competitors from South Korea and Japan have been stepping up activity there.
But Taiwan's opposition, which favours independence from Beijing, has repeatedly warned against easing controls, fearing closer economic integration.
Explore further: Yik Yak's frat-bro founders shrug off growing pains