New iPad Could Have AO Optronics Panel: Rumor
September 13, 2012

Despite Price-fixing Concerns, Apple May Still Do Business With AU Optronics

Michael Harper for — Your Universe Online

In March, Taiwanese display maker AU Optronics was convicted by the US Department of Justice on claims of fixing the prices of LCD screens. According to the DOJ´s accusations, executives from AUO and AUOA, the American subsidiary of the Taiwanese company, met every month with other LCD suppliers in what the company referred to as “Crystal Meetings” over a span of 5 years to adjust their prices.

On Tuesday, the DOJ asked a federal judge to impose a hefty $1 billion fine on AUO for allegedly participating in this price fixing scheme.

Additionally, the department asked the judge to hand down a 10-year sentence along with $1 million in fines to 2 convicted AUO executives. According to the 56-page court filing on Tuesday, the DOJ said: "These defendants were central figures in the most serious price-fixing cartel ever prosecuted by the United States.”

"Only these sentences could possibly reflect the seriousness of this offense or provide adequate deterrence."

AUO Vice Chairman H.B. Chen and former Executive Vice President Hui Hsiung were named directly in the filing as the executives who could face jail time as a result of these convictions.

The DOJ went on in their court filing to mention how this price fixing scheme had "affected every family, school, business, charity and government agency that paid more to purchase notebook computers, computer monitors, and LCD televisions during the conspiracy."

AUO filed their own court documents yesterday in response, claiming that any fine over $285 million is too high, and that the total fine should in fact be much lower than the one handed down by the department. Calling the DOJ´s actions “unreasonable,” the AUO court filings blamed the US department for attempting "to punish AUO for its temerity in electing to subject the validity of the government's charge to the test of a jury trial."

The accusations made by the Department of Justice also include display makers LG, Sharp and Chunghwa Picture Tubes Ltd., each of whom have plead guilty to these charges. Together, a total of 7 companies have said they participated in this scheme and have agreed to pay a fine to the DOJ which shall not exceed $890 million. As a part of this case, the department has also listed 22 executives who were personally involved in this scheme.

According to the DOJ, computer and television makers were affected by these Crystal Meetings, including Dell, Hewlett Packard, and Apple.

Although Apple may have once been affected by these price fixing schemes in years past, one rumor site ran a story yesterday claiming Apple could be continuing business with the Taiwanese display maker.

According to DigiTimes, AUO will be provide as many as 500,000 panels in September alone for Apple´s hotly rumored 7.85-inch tablet, said to be called the “iPad Mini.” Such a tablet could be announced as early as October.

Citing industry supply chain sources, DigiTimes also said AUO started producing these displays in June, pushing out nearly 400,000 a month since then. LG, who also plead guilty in this price fixing scheme, is also said to be producing as many as 600,000 of these displays for Apple. This increase in business for AUO, according to DigiTimes, could help recoup some losses incurred over the last 7 quarters.

AUO´s sentencing is scheduled to take place on September 20th in US District Judge Susan Illston´s court in San Francisco, California.