Recently, AUO's board of directors approved a major asset disposal plan. The target is the Taichung Phase II factory area, including 9 buildings, cleanrooms, and facility support systems such as L5C (Gen 5 line) and L7A (Gen 7.5 line). The usable area is approximately 166,000 ping. TSMC announced the confirmation of this transaction on the same day, stating that the acquired assets will be used for future operations and production.
The asset transaction price for the two production lines is NT$38.8 billion, equivalent to approximately CNY 8 billion. This marks the second time TSMC has purchased cleanroom facilities from panel manufacturers, strengthening its advanced packaging capacity layout.
▋ TSMC Buys Panel Fab Again to Boost CoWoS
In August 2024, Innolux sold its Southern Taiwan Science Park Fab 4 (Gen 5.5 line) to TSMC for NT$17.14 billion, recognizing a disposal gain of approximately NT$14.7 billion.
Both transactions reflect how TSMC is rapidly expanding its advanced packaging capacity by acquiring existing panel cleanroom facilities, driven by AI computing demand. In 2024, NVIDIA's H100 and H200 were at peak shipment stages, and CoWoS capacity was widely recognized as a bottleneck in the supply chain.
As technology roadmaps continue to evolve, industry requirements for packaging formats are also broadening.
In April 2026, TSMC disclosed a roadmap at a forum in the United States: CoPoS will undergo equipment and material verification in 2026, small-batch trial production in 2027, and mass production between late 2028 and 2029. TSMC Chairman C.C. Wei stated that it would take two to three years for CoPoS output to reach significant scale.
Beyond traditional CoWoS, chip packaging for next-generation AI hardware is evolving toward larger substrates, co-packaged optics (CPO), and CoPoS. These new processes impose higher standards on factory ceiling height, floor load-bearing capacity, and available space for large-format manufacturing. Compared to the Gen 5.5 fab previously sold by Innolux, the Gen 7.5 fab package being disposed of by AUO offers spatial dimensions better suited to the development and mass production needs of these next-generation packaging solutions.
▋ Why Is AUO Selling?
For panel manufacturers, this transaction signifies an elevation in the tier of asset liquidation: previously, Taiwanese vendors primarily disposed of lower-generation lines such as Gen 5 and Gen 5.5, but this deal extends the scope to Gen 7.5 lines, which were once the mainstay of Taiwanese panel production.
Given the long-term competitive landscape of the industry, the capital return potential for continuing to operate such lines is limited, making asset monetization a more pragmatic choice. AUO itself has been continuously pursuing asset optimization.
Over the past year, AUO has completed multiple factory disposals, including selling the Tainan fab to Micron, the Hsinchu Science Park L3C fab to Powertech Technology, the Kaohsiung fab to ASE, and the Singapore AFPD fab to Western Digital. These transactions collectively recovered approximately NT$34.7 billion in funds.
In a 2024 interview with Hangjia Shuo, AUO CEO Peng Shuanglang explained this asset adjustment strategy: many low-generation production lines have low efficiency and higher carbon emission intensity, so the company is gradually phasing them out. After phase-out, there are mainly two destinations: some factory areas will be repurposed ('replacing cages with birds') for Micro LED production lines; if internal transformation is not suitable, asset monetization is achieved through sales.
"The recovered funds will be reinvested into manufacturing segments with higher value-added," he added. He also noted that AUO no longer tends to persistently build new panel production lines with heavy capital investment. Instead, the focus of resource allocation is shifting towards system and solution businesses, covering hardware and software, and extending towards system solutions by leveraging ecosystem construction.
In recent years, the company has reduced heavy capital expenditure on front-end panel manufacturing, instead extending its layout to downstream application ends through acquisitions, partnerships, and investments.