A group of companies has formed a strategic alliance that may be the basis of a "total solution" provider for liquid crystal display monitor makers, securities analysts said yesterday.
Ritek Corp
Ritek, Taiwan's largest manufacturer of recordable compact discs, is a major stockholder in TNET and provides the management for the company, company officials said. The company does not now have a 35 percent stake in the company, as had been reported yesterday, they added. TNET's research team comes from Japan and Taiwan's Industrial Technology Research Institute. The team developed the backlight module in Japan and has already begun production tests in Taiwan.
Sunplus Technology Co Ltd is a strategic partner of Ritek and designs and manufactures controller and driver integrated circuits for LCDs. Driver ICs drive the transistors in an LCD panel and controller ICs control the drivers. In the past week, the company has purchased more than two million Ritek shares. The share purchase, costing about NT$256 million, was to strengthen the relationship between the two companies, Sunplus reportly said.
In the meantime, Taiwanese companies have invested about NT$200 billion over the past two years in developing production lines for thin film transistor LCD panels, said Timothy Chen, an electronics analyst at Entrust Securities. The panels are used for notebook PCs and information appliance products. By the end of next year, twelve TFT-LCD production lines will be in operation, said. Chen.
"This will create huge demand for components," he said. "Backlight modules are a major component for TFT LCDs."
Other major components include driver ICs and controller ICs, which Sunplus manufactures.
"Ritek wants to have higher exposure in the LCD and OLED (organic light emitting diode) market and Sunplus wants to increase its sales of LCD-related driver ICs," said Milton Huang, an electronics analyst at National Securities Corporation.
It therefore makes sense for Sunplus to have a relationship with Ritek, Huang said, and create an alliance with backlight module maker TNET. Together, they can provide a total solution for LCD screen makers, he said.
With production of TFT LCD panels expected to increase next year, the combination of LCD components providing a one-stop "total solution" may be attractive for the companies in question, but it doesn't guarantee large profits. "It's too early to judge," said Entrust Securities' Chen.
The profit margin for backlight modules is not very high, and an increasing number of companies are moving into the business, said Chen.
Ritek said on Tuesday that TNET would grab a 30 to 40 percent share of the market in backlight modules. TNET would produce 1.5 million module sets per year in its first production phase and then increase output to three million sets in the second phase, Ritek said.
But even if the potential revenue from backlight modules and other components is unclear, the relationship between Ritek, Sunplus and TNET demonstrates Ritek's keenness to get into the screen display business, Chen said.
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