AUO Corporation ("AUO" or the "Company") (TAIEX: 2409; NYSE: AUO) today released unaudited consolidated results for the three months ended June 30, 2005. All financial information was unaudited and was prepared by the Company in accordance with generally accepted accounting principles in Taiwan ("ROC GAAP"), the amounts in New Taiwan Dollars ("NT$") were translated into US dollars (US$) at NT$31.64 per US$1.00 based on the noon buying rate by the Federal Reserve Bank of New York as of June 30, 2005.

For the second quarter ended June 30, 2005, AUO's consolidated revenues reached NT$46,247 million (US$1,462 million), a 19.1% increase from the first quarter of 2005. Net income for the second quarter of 2005 totaled NT$470 million (US$15 million), while basic EPS* was NT$0.13 per common share and US$0.04 per ADS.

Gross profit in the second quarter of 2005 increased 158.2% to reach NT$3,163 million,
while operating income amounted to NT$532 million, compared to an operating loss of NT$1,940 in the first quarter of 2005. Gross margin for the second quarter improved to 6.8% from 3.2% in the previous quarter, while operating margin improved to 1.1%, compared to negative 5.0% in the first quarter of 2005.

AUO's large-size panel shipment (10" and above) reached 7.0 million in the second quarter of 2005, a 16.6% increase quarter-over-quarter and a 49.0% growth year-over-year. Shipment of small- and medium-size panels totaled 11.8 million, representing a robust 36.9% growth quarter-over-quarter and 61.1% growth year-over-year.

For the six months ended June 30, 2005, AUO's consolidated revenues totaled NT$85,084 million (US$ 2,689 million). Net loss in the first half of 2005 was NT$1,659 million (US$ 52 million), while Basic EPS was negative NT$0.30 per common share and negative US$0.09 per ADS. For the first six months ended June 30, 2005, unit shipments for large-size and small- and medium-size panels totaled 13.1 million and 20.5 million, respectively.

Mr. Max Cheng, CFO of AUO commented "the second quarter results exceeded our guidance announced during our first quarter 2005 investor conference, primarily contributed by product mix change and stabilizing panel prices seen in certain applications. In addition, the smooth ramp-up progress for AUO's 6th generation fab also contributed to the successful execution of AUO's LCD TV business strategy and production allocation plan, and provided us an opportune timing to expand our larger size LCD TV panel business. Through effective cost control and enhanced operational efficiency, AUO was able to achieve a gross margin of 6.8% for second quarter of 2005, an improvement from the 3.2% gross margin of the first quarter 2005. In addition, our inventory continues to improve with inventory days declining again from the 38 days as of March 31, 2005 to 32 days on a consolidated basis as of June 30, 2005.

Dr. Hui Hsiung, Executive Vice President of AUO added. "AUO's new sixth-generation fab ("G6", 1,500mm x 1,850mm) that commenced ramp-up process in March 2005 is well on track. The new capacity contributed from ongoing ramp-up of the G6 fab supported the increase in our 32" LCD TV panel shipment in the second quarter 2005. We are targeting to ramp up its monthly substrate input capacity to 60,000 substrates by end of this year, from 25,000 substrates at end of June 2005. We expect the ramp-up of our 6G fab to be well-timed to capture the emerging demand for LCD TV, especially from the fast growing 32" and 37" LCD TV markets.

* 2Q'05 Basic EPS was calculated based on 5,489 million shares, to reflect the adjustment of total weighted average outstanding shares of 4,946 million plus 543 million dividend shares to be distributed.