Feb. 19 (Bloomberg) -- AU Optronics Corp., the world's third-largest maker of liquid-crystal displays, plans to invest NT$294 billion ($9.3 billion) to build two factories to meet demand for large-sized LCD TVs, a government official said.

AU Optronics will begin construction of one of the plants at the manufacturing site in Taichung, central Taiwan, at the end of the year, Yu Chih-shiang, a spokesman at the park, said by phone today. The LCD maker didn't identify the size of the glass sheets it plans to cut from the new factories, Yu said.

AU Optronics joins Samsung Electronics Co. and LG. Philips LCD Co. in making screens for TVs measuring 50 inches or larger diagonally. LCD TVs may outsell plasma sets this year as they offer brighter picture quality and have become more affordable, according to Lehman Brothers Holdings Inc. analyst James Kim.

The Economic Daily News reported earlier today that AU Optronics will spend $9.5 billion to build two so-called 8.5- generation LCD factories. The more advanced plant would be able to handle larger sizes of glass used in displays for TVs than current factories.

The LCD maker hasn't decided whether it will build 8.5G or more advanced facilities in Taichung, nor has it said how much it will spend on the factories, AU spokeswoman Rose Lee said today. An 8.5G line costs about $3 billion and approximately 18 months to build, she said.

The company's most advanced factory at present in Taichung is its 7.5G facility, which can make screens measuring 40 inches or more diagonally.

Shipments of LCD TVs worldwide will probably rise 29 percent to 101 million sets this year, while plasma TVs will increase 25 percent to 15 million, according to estimates by Lehman's Kim.

AU Optronics, based in Hsinchu, Taiwan, climbed 2.2 percent to NT$55.60 on the Taiwan Stock Exchange. The island's benchmark Taiex index rose 1.7 percent.

To contact the reporter on this story: Chinmei Sung in Taipei at csung4@bloomberg.net.

Last Updated: February 19, 2008 00:40 EST