Sales of liquid-crystal display TVs in China climbed 50 percent to 4.2 million from a year earlier, "as consumers changed bulky cathode-ray tube TVs to flat-screen models," said Kuo Chen-Lung (郭振隆), vice president of Chi Mei's global sales and product development. "Sales in the overall TV market declined." Chi Mei is Taiwan's second-biggest maker of LCDs.

China's government said in December that it plans to buy $2 billion of flat panels from Taiwanese companies to help boost the island's economy. In November, the government said it would offer a 13 percent discount to farmers in 14 provinces to purchase TVs, home appliances and mobile phones, expanding the program nationwide from February.

"China's subsidy plan for farmers to buy household appliances is helping demand," Kuo said on a conference call in Tainan, Taiwan, where the company is based. "The profitability of these TVs is just as good as other products."

China's demand for LCD TVs will rise to 23 million sets this year, of which 15 percent to 20 percent will be purchased through the subsidy plan for farmers, Kuo estimated.

Prices of TV panels will rise 5 percent to 10 percent this quarter from the previous three months, Denis Chen (陳世賢), a Chi Mei spokesman, told investors and reporters in a teleconference Tuesday. Prices of screens used in LCD monitors will climb 10 percent to 15 percent, while those used in notebook computers will climb 5 percent, Chen said.