Philips is `cautiously optimistic'

At a celebration marking Philips Electronics Industry's 35th year of operations in Taiwan, president and CEO of Philips-Taiwan Paul Zeven said he hopes to see business roughly similar to last year's NT$200 billion (US$5.88 billion) and he is "cautiously optimistic" Philips will finalize all CD-R agreements soon.

Holland-based Philips did NT$200 billion worth of business in Taiwan last year in a wide range of industries, including computer displays, picture-tubes, semiconductors and other electronics. A large portion of Philips' economic activity in Taiwan is in manufacturing and roughly 75 percent of all products are exported.

"This year, of course, will be a difficult year," Zeven said. But the CEO said as a benchmark, last year's target of NT$200 billion "is our hope, but it's too early to say," due to poor market conditions in the electronics industry.

In Philip's first public comments on its CD-R intellectual property rights dispute with Taiwanese manufacturers, Zeven said he sees a resolution to the conflict soon.

"I do not believe we should fight out our business disputes via the press or via a political scenario ... it is a very difficult and complicated issue which has to do with the very basic rights of IPR [intellectual property rights] and even though the FTC [Fair Trade Commission, 公平會] has ruled negatively against us, we are abiding by its decision even though we are appealing it," he said.

He said an agreement has already been reached with one of the firms involved in the dispute, while discussions with other Taiwanese CD-R makers "are already in quite a far stage of negotiations ... We are all looking for a solution in the win-win sphere and I am quite optimistic in this context."

Last January, Philips Electronics canceled a technology transfer license with local CD-R manufacturers including Ritek Corp (錸德) and CMC Magnetics Corp (中環) in response to being fined by Taiwan's Fair Trade Commission, according to officials from Ritek.

The Commission included two Japanese firms, Sony Corp and Taiyo Yuden Co, in the suit alleging the three had violated Taiwan's fair trade law by acting jointly in CD-R patent licensing agreements and that such actions must end.

It also levied a NT$8 million (US$235,000) fine on Philips, ruling the company abused its dominant market position to prevent other firms from entering into technology licensing agreements with Taiwanese CD-R manufacturers.

Taiwanese firms, like market leader Ritek and competitor CMC, currently account for 80 percent of worldwide CD-R production and sell their products around the world.