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AU Optronics Corporation (NYSE:AUO)

Q4 2005 Earnings Conference Call

February 8th 2006, 7:00 AM.

Executives:

Julie Chan, Senior Manager Finance

Dr. David Su, Vice President and General Manager, Consumer Electronics Display

Max Cheng, Vice President and Chief Financial Officer

Dr. Hui Hsiung, Executive Vice President

Dr. L J Chen, Vice President and General Manager Global Manufacturing

Analysts:

CJ Muse, Lehman Brothers

Matthew Smith, CICB

Song Lee Sambu, HSBC

Ajay Sharma, Legg Mason

Andrew Trey, BM

Andrew Root, Asset Management

Daniel Kim, Lynch

Frank Wang, Morgan Stanley

Operator

Welcome to the AU Optronics Corporation Fourth Quarter 2005 Results Conference Call. The conference call will be recorded, and webcast at the request of AU Optronics. Any objections, please hang-up now. A copy of the presentation for AU Optronics Fourth Quarter 2005 Results Announcement can be found and downloaded from its website at www.auo.com under investors. Again, it's www.auo.com under investors. My name is Hardrie, and I will be conference coordinator for today. At this time, all participants are in a listen-only mode. We will be facilitating a question-and-answer session towards the end of the conference. If at anytime during the call you require assistance, press '*' then '0' and an operator will be happy to assist you. I would now like to turn the call over to Miss Julie Chan, Senior Manager of Finance Division. Please proceed, ma’am.

Julie Chan, Senior Manager Finance

Hi. Good morning and good evening to all participants. This is Julie Chan, Senior Finance Manager of AUO. And here, joined with me, we have Mr. Max Cheng, CFO and VP; Dr. Hui Hsiung, Executive VP; Dr. David Su, VP and General Manager of our Consumer Electronics Display Business Group; and Dr. L. J. Chen, VP and General Manager for the Global Manufacturing. We will spend the first part of today’s conference call reviewing our prepared remarks, which correspond to the slides available on our website. Following this, we will open the floor to take your questions.

Before we begin, I would like to state that management’s comments about AUO’s current position made during this conference call are forward-looking statements subject to significant risks and uncertainties, and that actual results may differ materially from those contained in the forward-looking statements. The financial results we are discussing today have been prepared on a consolidated basis, in accordance with accounting principles generally accepted in Taiwan, ROC GAAP. You should be cautioned that these accounting principles differ in many respects from the U.S. GAAP. Information as to those factors that would cause actual results to differ materially from AUO’s forward-looking statements may be found in AUO’s Annual Report on Form 20-F, filed with the U.S. Securities Exchange Commission. AUO takes no obligation to update any forward-looking statements, either as a result of new information, future events or otherwise. Please take a minute to read the disclaimer.

Now, if I may, to have you turn to our slide number three of our presentation material. Our fourth quarter ’05 consolidated income statement and quarter-over-quarter comparison for the fourth quarter ended December 31, ’05, AUO consolidated revenue totaled NT$72.8 billion, which is about $2.2 billion, representing 22.3% increase quarter-over-quarter. Our operating income was NT$12.5 billion, which is a significant 111.5% improvement from NT$5.9 billion in the Q3 ’05. The income in Q4 ’05 reached NT$11.5 billion compared to NT$5.8 billion in Q3 ’05, represents nearly doubling situation improvement, while our basic EPS is NT$2.02 per common share, in U.S. dollars $0.62 per ADS for the quarter. With the introduction of new products, continuous improvement on our costs and a favorable foreign exchange, gross margin improved from the 15.6% in Q3 ’05 to 22.2% in Q4 ’05.

Our operating margin also improved from 9.9% to 17.2% and therefore, EBITDA margin reached 31.3% in Q4 ’05. In terms of unit shipments, our large size panel shipments grew 20.4% quarter-over-quarter, to reach 9.6 million due to seasonal demand, small and medium size panels, however, declined by 9.3% quarter-over-quarter, to 15.9 million. Slide number four please. This shows AUO’s year ’05 with revenue of NT$217.4 billion, equivalent to US$6.6 billion, net income of NT$15.6 billion, basic EPS to be NT$2.77 per common share and US$0.84 per ADS. For the year ’05, gross margin totaled 13.7%, EBITDA margin was 23.7% and ROE was 10.9%. In terms of unit shipments for the year ’05, large size panels reached 30.7 million, a 62.6% year-over-year increase. Small and medium size panels totaled 54 million, another 62.2% year-over-year growth.

Now, slide number five, on the balance sheet highlights. During the quarter cash and short-term investments increased by 46.8% quarter-over-quarter, from NT$19 billion to NT$27.9 billion, supported mainly by the business improvement. Inventory, on the absolute dollar amount, increased moderately from the previous quarter to support a significant revenue and shipment growth for the Q4 ’05. Inventory turnover days, however, remained at the same level, 28 days, similar to Q3 ’05. As a result, this helped AUO’s debt-to-equity ratio improved from 62.7% to 60.2%, and net debt-to-equity ratio also reduced to 43.3% at the end of Q4 ’05.

Next slide, slide number six, cash flow highlights. During the quarter AUO generated NT$22.1 billion operating cash inflow, mainly from the net income of NT$11.5 billion and depreciation amortization of NT$10.3 billion. Net cash used in investment activities totaled NT$16.9 billion, mainly for the capital expenditure of NT$17.2 billion. A net financing total of NT$3.5 billion were attributable to the increase of NT$3.5 billion in net debt. As a result, AUO ended the quarter with a cash balance of NT$8.5 billion.

Now, slide number seven, cash flow highlights for the full year 2005. AUO generated NT$48 billion operating cash inflow, mainly from net income of NT$15.6 billion and depreciation and amortization of NT$34.5 billion. This was partly offset by an increase in net working capital. Net cash used in investing activity totaled NT$82.5 billion, mainly for 2005 total capital expenditure of NT$80.7 billion. We expect our 2006 CapEx to be around NT$90 billion to NT$95 billion. The net financing total, NT$43 billion, were attributable to the increase of NT$33.8 billion in net debt and NT$15.6 billion ADS issuance offset partially by cash dividends of NT$5.9 billion. As a result, AUO ended this quarter with a cash balance of NT$8.5 – as a result, AUO ended the year of cash balance of NT$8.5 billion.

Now, then if you look at our business analysis, for this quarter the large size panels accounted for about 89% of our total revenue. From slide number eight provides a very quick overview on the breakdown of large size panel shipments by application. Due to AUO gaining market share in our notebook business and the very strong demand on the LCD-TV in this quarter, percentage of LCD monitor panels in our large size panel shipments reduced 3% sequentially to 56%, and notebook panel shipments increased 2% to 24%.

On the TV side, we continued to see the percentage contribution to rise from the 12% in Q2 ’05 to 14% in Q3 ’05 and 16% in Q4 ’05. The remaining 5% of large size panel shipments were supported by general display and audio/video applications in both Q3 and Q4 ’05. With the LCD-TV demand being stronger than we anticipated, especially 32” and above become the mainstream size for LCD-TV today, our blended ASP improved marginally, and we will discuss this on the later slide.

Now, let’s turn to slide number nine. Let’s take a look on the breakdown application from the consolidated revenue basis. Monitors reduced from 47% to 44% of our total revenue in this quarter. Notebook business increased to 16% from the 13% in Q3 ’05. TV in this quarter improved the most, and becoming the main business driving for the industry and AUO. On an absolute dollar comparison, LCD-TV increased by 46% quarter-over-quarter and substantially 269% year-over-year. As a result, TV accounted for 37% of our total revenue in this quarter, comparing with only 22% in Q3 ’05 and it was only 10% a year ago, that was Q4 ’04.

Audio/video display, which are mainly small/medium size panels, contributed by seasonality, strong penetration in several new application, resulted in a 32% of our business. We do expect the ratio of our Consumer Electronics business will continue to expand. PC we think is expected to reduce from the 60% in the second half of ’05 to be about 50% of our total revenue in Q1 ’06.

Slide number 10, unit shipments and blended ASP of AUO’s large size panels. The unit shipments of the large size panels increased by 20% from 8 million in the Q3 ’05 to 9.6 million in the Q4 ’05. Blended ASP improved slightly from the US$199 to US$202.

Slide number 11. If we take a close look on the pricing of the major products, that is supporting the ASP of the large size panels. ASP of PC actually decreased marginally from the $174 to $170. This is due to the increase on the notebook shipments in our business, and the weaker pricing environment of some of the PC applications.

Meanwhile, the ASP for TV improved from $364 to $385 for 45 enhanced LCD-TV size we have, especially for the 33” and above. Noticeably, the predominance of PC products was accompanied by TV products. As a result, this helped the blended ASP of large size panels improved from $199 to $202, as we have mentioned in our slide number nine.

Please turn to next slide, slide number 12. From the per square meter perspective, the blended ASP per square meter increased marginally to US$2147 this quarter from US$2145 in the Q3 ’05, while shipments were increased substantially from the 834k square meter to 1031k square meter.

On our next slide, slide number 13, let’s take a look on the sales of AUO small/medium size panels. Small and medium sized panels are more seasonality in nature. Sales in this product, normally peak in Q3 and Q4, and turn softer in Q1. We do expect, anticipate this seasonality pattern will repeat and pricing to be – demand to be softening up in Q1 ’06.

Next slide, slide number 14, AUO’s installed capacity by Fab. To meet those demand, we, first of all, on our Gen5 Fab, which we name L8C, remain some 60k substantially, substrate monthly capacity in Q1 ’06, expect to be fully ramped up to 130k monthly capacity by year-end ’06 and therefore our Gen6 Fab is expected to deliver 75 substrate by Q1 ’06 and reach 120k by year-end.

For Gen7.5 Fab, we expect to commence machine moving by Q2 ’06, to begin production by year-end with 10k capacity. And therefore our Gen3.5 Fab, we expect to modify the capacity to meet official product demand and our Gen3.5 Fab would be 25k substrate monthly capacity for the LTPS and with 40k substrate monthly capacity by end of 2006.

Lastly, we would like, based on the current good result the management do expect AUO’s first quarter performance to be the following. Large size panel shipments expect to be flat to marginal decline quarter-over-quarter due to seasonality. Among the large size panels, PC shipments expect to decline by a single digit percentage point. TV shipments expect to increase by about 20% quarter-over-quarter. And then due to seasonality, small and medium panel shipments expect to experience sequential high single-digit percentage decline.

For the blended ASP for large panels, we expect the PC to decline by around 10% quarter-over-quarter. For the TV, expect to increase by mid single-digit percentage point, mainly supported by enhanced product mix. And the third point, for PC segment, we expect PC segment to account for 50% of our overall revenue in the first quarter ’06. For the loading of our Fabs, all Fabs expected to be fully loaded, with the exception of Gen3.5 Fab to be around 95% utilized.

And this shall end our presentation. Thank you very much. Operator, can we open the floor for questions?

Questions-and-Answer Session

Operator

Operator Instructions Our first question will come from the line of CJ Muse with Lehman Brothers. Please proceed.

Q - CJ Muse

Yes. Good evening. I was hoping to, I guess, talk briefly about LCD-TVs. Can you give us some information in terms of what you’re seeing on panel inventory side for TVs, and what gives you the confidence that TVs are going to grow 20% sequential in 1Q?

A - Dr. David Su

Yes. This is David Su. For your question about the TV inventory, actually the sales grew for, compared with Christmas season and in January, actually it’s quite good. So the inventory level for TV and the camera as its quite low, and that’s, actually its still picking up compared with Christmas season. So that’s why the our shipment is for Q to Q, we expect around a 20% increase. So in terms of this healthy inventory, I think the Q1 should be still a good season for TV.

Q - CJ Muse

And what are your initial thoughts, looking to Q2 and Q3, typically the seasonally weakest periods for TV sell-through?

A - Dr. David Su

For Q2 or Q3, no, it’s hard for us to know those forecasts, but based on the Q1 performance we are still quite optimistic for the coming quarters.

Q - CJ Muse

Right. And in terms of the mix for average size TVs, can you comment on what percentage of the units you expect to sell for TVs in 1Q will be 32” or above?

A - Dr. David Su

Percentage-wise, we’re over 50%, more than 50% is about for 32”.

Q - CJ Muse

Great. And last question from me, on the components and materials side, we heard from Kuen he talked about large single-digit decline in the ASPs there in the 1Q. Can you, I guess, comment how you expect that to flow into your cost base, and when we should start to see savings on that end for you guys?

A - Max Cheng

Yes. We do, this is Max Cheng, I’ll try to answer your question. We do expect the costs should come down a little bit but please allow me to state it’s confidential. It’s hard to say how much we can gain from our components at this moment.

Q - CJ Muse

Great. Thank you all very much.

Operator

Our next question will come from the line of Frank Wang, Morgan Stanley. Please proceed.

Q - Frank Wang

Hi. My first question is, can you talk about the costs down, the magnitude you had in the fourth quarter?

A - Max Cheng

Well, this is Max Cheng again. It’s hard to say how much. I guess, it’s in mid single digit, around that kind of a range for the fourth quarter last year, because we have about a 9% margin improvement. However, that’s kind of a combination of the product mix change, and also the depreciation of NT dollars against the U.S. dollars. So therefore many factors contribute to the total high single-digit margin improvement, not everything comes from our costs down, although we did do a large measure on the costs down, which can give, you see, that kind of a result, hopefully in this year.

Q - Frank Wang

Thanks. The second question is regarding, in terms of the number of working days you have in Q1, you just posted January month sales number. Can you show what, how many last working days you had in the month of January compared to December?

A - Max Cheng

You mean working days?

Q - Frank Wang

Yes.

A - Max Cheng

Because, due to the Chinese New Year holiday in this month - in January, and outside that I guess almost, well, our customers they shut down their factories from maybe like 27th, so there would be 27 working days in the first month. Compared to last month, I’m sorry, compared to December there would be 31 working days, so that’s a big difference between the two months. So that also impacts our shipments in the first month of this year.

Q - Frank Wang

I’m sorry, how about for the month of February?

A - Max Cheng

Well, again, this month we would get 28 only, so that the shipments also could be a bit impacted by that kind of reason. Hopefully we can pick up some, take some back on March.

Q - Frank Wang

Are you coming to pick?

A - Dr. Hui Hsiung

This is Hui Hsiung. I’d like to add some comments regarding the volume change. Actually, the first quarter as a whole, PC demand, I think the whole industry has had a traditional low season. But this year we believe its maybe, the demand drop is around high single digits, perhaps up to 10%. However, the TV panel demand actually is up, as David Su mentioned. We believe it’s 10% or higher. But that’s for the whole industry. But for AUO, what we saw the first month, January, the working days, well actually our factory did not close, especially the front end of the production. But the shipment days is limited because of the vacation by the customer and custom in China, those limit our actual shipments. But certainly part of that comes from a slower demand from PC customers. However, we saw the picking up of the demand starting from February and entering into March as well. So we believe that we can recover some of the shipments lost during January for the quarter in terms of PC demand.

Q - Frank Wang

Okay. Thank you very much.

Operator

Our next question will come from the line of Matthew Smith with CIBC. Please proceed.

Q - Matthew Smith

Yes. Hello, everybody. I was hoping you could give us some color in terms of your LCD TV mix on the Generation 6 line through the fourth quarter? And how do you expect the mix to change in the first quarter, given that you see blended ASPs rising by about 5% sequentially? And also, looking out towards fourth quarter ’06, how do you see the mix in terms of TV panels at that point in time? Thanks.

A - Max Cheng

Yes. For your question about the slight trend from Q1 till the end of this year, we do see the trend for LCD TV actually is moving to larger size, like moving from 32 and more towards, or even towards 37. So, based on these expectations, certainly the blended ASP can have some improvement but we should consider the price drop also. So from now to use the current data to predict the Q4 blended ASP is very difficult for us, even we know our product combination are moving toward more to the larger size. But it seems like again the price can have some erosion as time goes by, so it’s very difficult to predict. So I can only answer you is that to allocate, the larger sized TV panel will increase in our product portfolio.

Q - Matthew Smith

Do you think that 37” could be the dominant size produced on new Gen6 line by the end of this year or do you think 32” will remain dominant?

A - Max Cheng

By the end of this year, 32 still is a bit more than 37, but it’s close to quantity. We’ll be very close.

Q - Matthew Smith

Okay. And one more question, if I may. How do you see gross margins trending in the first quarter, given the ASP guidance that you’ve given? Thanks.

A - Max Cheng

Well, usually we do not give gross margin guidance. However, due to the ASP decline in Q1, especially for PC, we expect about 10%. And also for the single, for the specific size of LCD TV panels, we would also expect some single-digit price decline.

So as a whole, for the Q1, definitely the margin has some pressure. Again, we will try to mitigate that by our cost on project. And hopefully we can reduce the impact by the same price decrease but at this moment it’s hard to say how much we can reduce the impact.

A - Julie Chan

Okay. Operator, next one, please.

Operator

Yes. Our next question will come from line of Song Lee Sambu with HSBC. Please proceed.

Q - Song Lee Sambu

Yes. Thank you. Great result, and I think the big surprise for me and for a lot of people was the cost down. So I just want to focus a couple of questions there. And thank you for providing the ASP per square meter data. As we work that data, I found that for the last five quarters, especially in 2005, basically the average unit cash cost in terms of square meter is down 28%. Do you think this is repeatable in 2006?

A - Max Cheng

Well, it’s hard to say. However, we did get the PC price a bit decline. We are looking for 170 ASP for the market depreciation. So we believe for the future they will be a bit smaller than before. Of course, we believe our TV still has some growth.

Q - Song Lee Sambu

In the fourth quarter alone, the cash, the unit production costs, let’s not talk about cash costs, just the unit production costs are down 8%. Can you tell us whether the majority of the cost down is on the TV side or on the PC side?

A - Dr. Hui Hsiung

This is Hui Hsiung to answer. Actually this is a curve. This is a curve of the price per unit area. Actually, it’s a combination of product mix as well as cost. So it’s actually a very complicated number lumped into one number. But roughly speaking, our biggest cost down comes from the ramp up of Gen6 yield rate. Actually we started to ramp up our Gen6 in Q2 and after six months actually, the yield rate becomes quite stable, especially we produce more than 60% in Gen6 of 32” and 37” products. And those yield rate reached a pretty high level in Q4. So this contributes significant in terms of the production cost. Another source of cost reduction comes from the introduction of our new models. In the second half of the year we started to introduce our cost down models for a number of products, including TV, monitor and notebooks. So it’s quite a broad scope of cost reduction from just a product design.

Q - Song Lee Sambu

Okay. Can I ask just one more question on just the cost side, I guess, and related to that? Can you give us a sense of where, the EBITDA margins overall for the Company are around 31%. Can you give us a sense of where the notebook, the PC, the desktop panel and then the TV panel, where do they fit in terms of which one is higher and which one is lower?

A - Max Cheng

Well, for the first quarter last year, it is harder. It seems to provide almost a similar EBITDA margin.

Q - Song Lee Sambu

Okay. Thank you.

Operator

The next question will come from the line of Ajay Sharma with Legg Mason. Please proceed.

Q - Ajay Sharma

Yes. Hi. Just on your expansion of 5G fab from 60 to 120k. Could you comment on what the product mixture will be? Will it still be producing mostly PC panels or producing TV panels on IT as well?

A - Hui Hsiung

Yes. For the Gen5 it will be mostly TV panels. It will be a combination of monitor and notebook panels. We try to move most of the TV panels larger than 26, including 26”, to Gen6. So that’s the starting point from that in quarter four. I think, in fact, in Q4 our TV production for Gen6 was about 50% and the first quarter it will increase to 75%. And so by first of the year, monitor, some of the monitors used to be produced in Gen6 will move back to Gen5.

Q - Ajay Sharma

And in terms of your CapEx of 90 to 95 billion, do you plan to issue additional equity sometime during the year to fund that, to fund part of that or what’s the planning there?

A - Max Cheng

At this moment we do not have any plan to do so. If we have enough earnings in this year, then definitely we don’t need to do that again in this year. And in addition, we have NT$85 billion, our bank facility has been ready, so we can draw down that one to fund our CapEx in this year.

Q - Ajay Sharma

Last question, on your ASP guidance for Q1. If you just take a simple average, it seems like you’re guiding for 5% on a per square meter basis, right? And on top of that, you have some NT dollar versus U.S. dollar depreciation as well. So adds up to 7 to 8%. I’m wondering, with the cost reduction, would be able to pace with that or was it actually more like mid single digit?

A - Max Cheng

You’re talking about Q4, right?

Q - Ajay Sharma

Q1. I’m saying you’re talking about….

A - Max Cheng

Q1, okay. Q1 again, okay. Roughly speaking, we did not take into account any change in foreign exchange in Q1 for that consideration there. We pretty much assumed, that factor is ruled out in this guidance. And for PC sales, our product mix will not change appreciable from Q4 to Q1 for PC products. So that decline in up to 10% of the decline comes from the unit price decline. And TV panels, the ASP does increase mid single digit, but actually the unit price also declined during the same period of time, but it’s somewhat less. It’s perhaps between 5 to upper single-digit percentage decline is expected for the PC, for TV panel as well. So that, however, the product mix change is toward larger PC side in particular. The majority of the increase are for 37” panels. So that hampered the net increasing blended ASP for the TV panels.

Q - Ajay Sharma

So I’m just trying to understand. So on a like-to-like basis it would be close to high single-digit decline, right, for overall flat size?

A - Hui Hsiung

Yes. As a whole, yes. The, in terms of unit price for any particular size of either PC or TV, we’ll have that. The product mix will change that or modify the blended ASP.

Q - Ajay Sharma

And does larger size in TV make more money for you than a smaller size or?

A - Max Cheng

We cannot really comment on that. Actually, I think in Q4 it’s very uniform. Certainly in the past, different products have different margins, but really nothing particularly sticking out that really extreme high margin or extremely low margin. So pretty uniform distribution. So the contribution comes around quite evenly from different product lines.

Q - Ajay Sharma

Okay. Thanks a lot.

Operator

Our next question will come from the line of Andrew Trey with BM. Please proceed.

Q - Andrew Trey

Thank you. I was just wondering about the cost as well as a number of the other questioners. Do you have an outlook for the non-depreciation costs, i.e. I think what people call the cash costs per square meter for the year, or do you have some sense of what you are expecting?

A – Max Cheng

Well, I’m sorry. I may not be able to give you that kind of answer because internally usually we do not speculate this kind of number based on the area side. So I may not be able to give you at this moment.

Q - Andrew Trey

Okay. What is the depreciation charge you’re expecting this year?

A - Hui Hsiung

Well, the total amount will be 45 billion, basically that the focus we have at this moment.

Q - Andrew Trey

And the total, obviously this implies also an implicit assumption of yield. But do you have a sort of square area half-on-half growth expectation or rough estimate for this year, as you bring on your new fabs?

A - Hui Hsiung

Roughly, very roughly speaking, it’s over 60% year, throughout the year. So that pretty much…

Q - Andrew Trey

So that’s 60% over the whole year?

A – Max Cheng

Yes. Over the whole year, yes. I don’t have the breakdown.

Q - Andrew Trey

Right. And what do you think you will end the year with, in terms of the mix of TVs and so forth?

A – Max Cheng

In terms of allocation, sorry, I don’t have that number. It’s really by, Generation 6 and 7, 7 has a majority is in the TVs there.

Q - Andrew Trey

Right. I was just wondering, lastly, whether or not you, the strength we’re seeing is in anyway related to the old chestnut of the World Cup in the middle of the year. Is there any of that type of production or planning coming through from your customers or is this just inherent momentum from the Christmas period that we’re seeing at the moment?

A - Hui Hsiung

Yes, certainly the World Cup event gives the momentum for selling and continuing from Christmas. So certainly that is a certain factor in promoting the LCD TV.

Q - Andrew Trey

So is there, that skewing factor, will that make the year look much flatter in terms of the usual year-end ramp?

A - Hui Hsiung

Yes.

Q - Andrew Trey

Right. So how does that fit with the production expansion that you’re seeing that will probably be mainly second half of the year?

A - Hui Hsiung

Actually, the first half of the year, our Gen6 expansion comes from exactly throughout the year. So that fits reasonably well with the expected ramp up for the demand. And also our Gen5, the efficient of Gen5 comes from, mainly from the second half of the year that we’re giving to the PC demand increase. So that alignment is okay. For the LCD TV, the first quarter demand we believe comes from the restocking of the, pretty much the pre-data channel costs. So partially that comes from that. Also entering January/March timeframe, actually they are getting ready for stocking for the World Cup. So the first half, indeed, is better than usual in terms of TV percentage.

Q - Andrew Trey

Okay. Alright. Thank you very much.

A - Julie Chan

Thank you. Operator, we will take the last two questions please.

Operator

Yes ma’am. Our next question will come from the line of Andrew Root with OTA Asset Management. Please proceed.

Q - Andrew Root

Thanks. The sales - and this may have been covered - but the sales reported for January down 9%. That’s a little bit lower, little bit bigger to climb than the last three years. So is February or March the month we really expect much better than seasonal months?

A – Max Cheng

Yes. We do have, we do expect February and March we are seeing an up trend from here, yet.

Q - Andrew Root

But I guess, versus historic seasonality, usually March was a great month. Will February actually be a significantly up month as well this year?

A – Max Cheng

That’s what we believe, although given shorter days that it somehow limits such an increase. But we do believe it’s an upward trend, yes.

Q - Andrew Root

Okay. The 20% up seasonally or the 20% up TV growth - in January what was your TV revenue or panel shipments? Were they down?

A – Max Cheng

No. The TV, both revenue and panel shipments, actually increased in January.

Q - Andrew Root

Okay. Thank you.

Operator

Our final question will come from the line of Daniel Kim with Merrill Lynch. Please proceed.

Q - Daniel Kim

Hello. I have a few questions. Can you hear me? Hello?

A - Julie Chan

Barely. Not very loud. Hello?

Q - Daniel Kim

Hello? Can you hear me?

A - Julie Chan

Yes.

Q - Daniel Kim

Okay. My question is, is there any possibility that your 70 fab glass size might be changed, even though part of your 7.5G glass…

A - Hui Hsiung

No. We don’t have any plans to change the 7.5. That fab is actually good for 42” and 47” panels, and that is well used. We use the same glass for the second phase.

Q - Daniel Kim

Okay. Thanks. And my last question is, my last, hello? My last question is your blended ASP on a square meter basis is actually higher than the one of your competitors in Korea, although your sales mix is lower for TV compared to your competitor. Does that means that on a unit basis your ASP, you’re probably selling higher price than your competitor in Korea?

A – Max Cheng

We wouldn’t say that. Actually, our unit price attract the market price pretty well. But we do have a high percentage of medium/small size portion of our business that tends to have a higher unit area price. So that’s raised the overall, I would say, price per unit.

Q - Daniel Kim

Okay. Thanks.

Operator

Thank you, gentlemen. Ladies and gentlemen, this does conclude our Q&A portion. I would now like to turn it over to Miss Julie Chan for closing remarks.

Julie Chan, Senior Manager Finance

Thank you very much for joining AUO’s conference call. Thanks. Goodnight.

Operator

Ladies and gentlemen, this does conclude your presentation. At this time you may disconnect.

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Source: AU Optronics Corporation Q4 2005 Earnings Conference Call Transcript (AUO)
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