TSMC to buy AUO plant facilities in Taichung for NT$38.8 billion
Key Facts
AUO’s board approved the sale of Phase II facilities and related infrastructure at its Taichung plant to TSMC for NT$38.8 billion, TokenPost reported on October 29. The company estimated a disposal gain of about NT$18.5 billion from the deal. The report attributed the board’s decision to AUO but did not specify when the sale would be completed. The deal comes as AUO reported a third-quarter loss while TSMC continues to deliver strong growth in its business. Based on the information available, TSMC has not announced how it will use the facilities or what effect the deal will have on its production capacity.
AUO’s consolidated revenue was NT$66.88 billion in the third quarter of 2026, down 5.7% from the previous quarter and 4.3% from the same period a year earlier, according to the company’s results. It posted an operating loss of NT$2.37 billion and a net loss attributable to owners of NT$2.50 billion. Basic earnings per share were negative NT$0.33. The results marked a reversal from the second quarter, when AUO reported net income attributable to owners of NT$1.34 billion and basic earnings per share of NT$0.18. The estimated gain from the facility sale adds a nonrecurring item to the quarter’s results and is not equivalent to recurring operating revenue.
AUO attributed the 11% quarter-on-quarter decline in display business revenue to continued weakness in consumer electronics demand. By contrast, revenue from vertical solutions rose 1% from the previous quarter, supported by shipments to the retail, healthcare, industrial and commercial sectors. Vertical solutions revenue had increased 11% in the second quarter, when the company said an improved product mix and operating efficiency had bolstered profitability. Display business revenue then fell 0.3% quarter on quarter. The differing performance of the two businesses shows continued pressure on displays alongside slower growth in vertical solutions in the third quarter. AUO said, "Seasonal restocking activities have largely come to an end, and customers have become more cautious in their purchasing behavior."
TSMC, meanwhile, reported third-quarter revenue growth of 17.6% from the previous quarter and 50.9% year on year, while net income rose 8.0% quarter on quarter and 68.7% year on year, according to the company’s results. Technologies at 7 nanometers and below accounted for 79% of total wafer revenue. Shipments included 2-nanometer technology, which contributed 8%, 3-nanometer at 33%, 5-nanometer at 28% and 7-nanometer at 10%. The chairman and chief executive said, "Demand related to the AI market remains far above our current supply capacity, and we are working very hard to narrow the gap." These indicators put the company’s outlook for the next quarter in the context of growing demand for advanced manufacturing, without TSMC linking that outlook to the AUO plant deal.
TSMC expects fourth-quarter 2026 revenue to range from US$52.3 billion to US$54.3 billion. Its chief financial officer and spokesperson said strong demand for advanced manufacturing technologies would continue to support performance, with 2-nanometer production ramping up faster. In its outlook for the coming period, AUO said demand for vertical solutions was relatively stable and its mobility business continued to pursue new projects. The market is awaiting TSMC’s next two monthly disclosures: October sales on November 10, 2026, and November sales on December 10, 2026. TSM shares closed at 439.51 on October 28, compared with 436.87 on October 27 and 412.35 on October 22, according to EL7 data.