Minister of Economic Affairs Shih Yen-shiang said Thursday that AU Optronics (AUO) must assure the government it will maintain a technology lead over China if it wants to build a US$3 billion flat panel plant on the mainland. A technology committee under the ministry is reviewing AUO's investment application with a focus on whether the company is able to uphold the government policy of maintaining a technology lead over the mainland to keep Taiwan on the top of the company's priority list for future investment. AUO sought approval from the government in March to build a 7.5-generation flat panel plant in Kunshan, Jiangsu Province. Shih said the ministry has asked AUO to make changes in the Kunshan investment plan, but he did not elaborate. AUO's application came after the Executive Yuan relaxed China investment restrictions in February, allowing Taiwanese thin film transistor liquid crystal display (TFT LCD) companies to establish up to three sixth-generation or above flat panel plants on the mainland. However, if any local flat panel producer wants to build TFT LCD plants above sixth generation, the applicant has to operate plants in Taiwan that are at least one generation ahead technologically. AUO now runs an 8.5-generation plant and has plans to set up a 10th-generation production base in Taiwan. Shih said local companies that plan to relocate on the mainland should carry out their investment projects in Taiwan as planned previously, and Premier Wu Den- yih has said AUO should keep its promise on the 10th-generation plant investment. Shih said any investment plan is subject to adjustments once the market and environment changes, adding that the government's request for changes is negotiable. He said that as long as AUO can meet the government's demand, the review is expected to proceed smoothly. Shih said the government does not want to see any serious delay in the review, which could cause Taiwanese investors to miss out on business opportunities. 