Last month, the TFTC also approved the proposed merger of three local LCD producers - Innolux Display, TPO and Chi Mei - into a new company to be named Chimei Innolux.

After the merger the newly formed entity will become one of the two largest thin film transistor LCD manufacturers in Taiwan and the total number of domestic players in the market will fall to six with relatively high entry barriers in terms of sunk investments and technological requirements. However, as there are no customs duties on these products if imported from China, Korea or Japan, there is considerable competitive pressure on local products. Additionally, given the ease with which customers could switch between local and foreign suppliers, the TFTC concluded that the merger would not give Chimei Innolux the ability to adversely affect the competitive structure of the market.