Hsinchu, Taiwan

AUO Corporation ("AUO" or the "Company") (TAIEX: 2409; NYSE: AUO) and Quanta Display Inc. ("QDI" TAIEX:3012) today announced that they have signed an agreement to merge Quanta Display Inc (QDI) with and into AUO. The merger agreement was approved this afternoon by the Boards of Directors of both AUO and QDI. The consolidation date of the merger is targeted for October 1st, 2006, at which time QDI will be absorbed into AUO. The merged entity will operate as AUO. The swap ratio for QDI to AUO would be 3.5 to 1, subject to be approved by the shareholders meetings of both AUO and QDI, and to be after AUO's increase of its paid-in capital.

After the merger taken place, two board members of AUO's Boards of Directors will be appointed by QDI. Mr. KY Lee and Mr. HB Chen will remain as Chairman/CEO and President/COO of AUO, while Mr. CC Leung will be appointed as Vice Chairman.

AUO's Board of Directors today also adopted a proposal recommending distribution of NT$0.3 cash dividend and 3 percent stock dividend (30 shares for every 1,000 owned) per common share and employee profit sharing in the form of NT$379,735,891 in cash and 88,605,041 in stock shares. The proposal will be discussed and approved at the Company's regular shareholders' meeting, scheduled for June 15, 2006.

Quanta's Chairman, Mr. Barry Lam stated that the strategic partnership combines the unique complementary strengths of both companies, especially in technology, product mix, customer portfolio, and different generations of manufacturing facilities. It not only creates the economy of scale and enhances the global competitiveness, but also offers an extensive product and technology portfolio as well as better service.

Mr. KY Lee, AUO's Chairman, reiterated that the merger will achieve the following objectives:

1. The resource especially in finance and human resources of Taiwan TFT-LCD industry will be re-shuffled and re-organized to create more powerful competitiveness. The consolidation of its kind and scale in Taiwan will take better advantage of funds and talents and bring long-term positive contribution to the whole industry.
2. AUO's capacity in area will exceed 19% market share globally, and immediately make it equivalent to its counterparts in Korea. In addition, its consolidated capacity of G5 & G6 fabs will reach No.1 position, plus the on-going capacity expansion on new generation fabrication, which will ensure AUO's leading position in TFT-LCD Industry.
3. AUO's strong execution after its former merger in 2001 has proved itself a top tier player in TFT-LCD industry. Also AUO will add over few years of managerial experience and successful merger practices, to ease the challenging merger process and upgrade its scale to global TFT-LCD leader.

Mr. CC Leung, Quanta's Vice President, noted that this strategic alliance will strengthen the future collaboration between AUO/BenQ group and Quanta Group.

Mr. HB Chen, AUO's President, added that the synergy of the consolidation would be demonstrated in three dimensions. First, the supply chain consolidation will be essential to the purchase of key components and the close partnership with supplier. Secondly, the research and development consolidation will expand design expertise and solidify a robust intellectual property portfolio. Lastly, the consolidation will leverage mutually complementary product portfolio of the two companies, especially in NB and TV applications, to increase a more completed customer portfolio.

All of these factors will allow AUO to bring the strengths of both companies together and raise its international competitiveness in TFT-LCD industry characterized by fast development and the growing trend towards concentration of capital and technology. The merger is expected to result in a strong long-term positive contribution to the equity of shareholders of AUO and Quanta Display Inc.