AUO Corporation ("AUO" or the "Company") (TAIEX: 2409; NYSE: AUO) understands that Sharp Corporation of Japan has initiated legal action in Japan against the Japanese business unit of TECO Electric and Machinery Co., one of AUO's customers, relating to its products that contain TFT-LCD panels manufactured by AUO.

In September 2003, Sharp filed a suit in the United States against AUO and certain other parties alleging infringement of certain of Sharp's patents in the United States relating to the manufacturing of TFT-LCD panels. AUO has also recently commenced a legal action against Sharp in the United States alleging unauthorized usage of an AUO patented technology in Sharp products, which may include DVDs, PDAs, DVCs and other audio-video applications. AUO cannot currently predict the outcome or likely outcome of these legal proceedings.

AUO respects intellectual property rights and seeks to ensure that a prior agreement is reached before utilizing patented technologies developed by third parties. AUO has entered into agreements in the past with companies including Matsushita, IBM and Fujitsu relating to TFT-LCD technologies. AUO regrets Sharp's decision to take legal action against an AUO customer in connection with its dispute with AUO.