This study examined the governance structure of critical parts at TFT-LCD panel industry, one of the most important industries in Taiwan. We developed the research framework based on the transaction cost theory and collected secondary data related to the research question then interviewed the decision makers of critical parts at the five important manufacturers in Taiwan's TFT-LCD industry. The results based on comparative case studies showed that small number of suppliers, uncertainty and transactional frequency and asset specificity has gradually increased among the critical parts in Taiwan's TFT-LCD industry. The firms adopted multiple governance structure with higher control to decrease transaction costs and result in higher performance.