China's Taiwan AU Optronics, the world's No. 3 LCD panel maker, said on Monday it will tie up with Sichuan Changhong to set up a $14.6 million LCD module venture on the mainland.

The partnership showed AU's efforts to beef up its presence in the mainland, where AU expects its panel shipments to its branded TV clients to grow sharply this year as Beijing's massive stimulus package has boosted demand for PCs and flat-screen TVs. Named BVCH Optronics (Sichuan) Corp, AU would own a 51 percent stake of the new venture, while Sichuan Changhong, one of China's top TV makers, would take the remaining 49 percent stake, AU said in a statement before the Taipei stock market opened on Monday.

"If the investment plan is approved by the government, the joint venture is expected to form closer ties between AU Optronics and the Chinese local brand maker, deepening AU's presence in west China," the statement said.

For now, under Taiwan's rules, LCD makers can only do final assembly work in China using panels produced in Taiwan and elsewhere.

Slack sales and lower prices pushed AU Optronics into the red in the past two quarters, but the company has recently benefitted from a spate of orders from China, and a recovery in TV demand in North America.

Beijing's massive stimulus package to boost its economy means AU and local rival Chi Mei could reap bigger profits in China, home to some of the world's biggest TV makers, including TCL Multimedia and Skyworth Digital.

Sichuan Changhong Electric has said it expects to produce 4.5 million LCD TVs this year, more than doubling from last year's level, as it benefits from China's economic stimulus spending.

Sichuan Changhong said it would buy 2.5 million to 3 million LCD panels, or about $1 billion worth, from Taiwanese display makers, including AU Optronics.

Together, AU and Chi Mei, Taiwan's two biggest LCD makers, could hold a 50 percent share of China's LCD TV panel market this year, up from 34 percent last year and larger than LG Display's 14 percent and Samsung's 12 percent.

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