Taiwan's third largest maker of computer displays, Chunghwa Picture Tubes Ltd (
The plan would divide the monitor maker into three firms focused on manufacturing thin-film transistor liquid crystal display (TFT-LCD), plasma display panels (PDP) and cathode ray tube (CRT) displays.
"The company needs to offload burdens such as the loss-making and declining CRT business," said Wang Chien-erh (
Last quarter Chunghwa Picture wrote off an unproductive CRT manufacturing plant in the UK, resulting in losses of NT$7 billion. Meanwhile, the company's thin-film transistor liquid-crystal display (TFT-LCD) business was profitable last year, making between NT$2 billion and NT$2.5 billion. An independent TFT-LCD company will attract new employees and investors, Wang said.
Chunghwa Picture said in a statement that the plan was still under review.
"The company is undertaking an internal assessment [on spinning off the three business units], and if that proves viable in the future, the company will make an announcement in line with current government regulations." The move could take place as soon as next month, Wang said.
The company has made internal changes so that the three manufacturing operations are now run independently, the stock exchange statement said.
"It does not make sense for Chunghwa Picture to keep all three business units in one company," said Debbie Wu (吳岱玲), an analyst at Yuanta Core Pacific Securities Co (元大京華證券) in Taipei.
The three different divisions have different investment requirements, and involve different manufacturing processes. Declining use of bulky CRT monitors is expected to be a boon for the the ever-expanding TFT-LCD market and the small but growing market for plasma panels, Wu said.
Chunghwa had planned to spin off its CRT business last year as global demand shifted to sleeker flat-screen displays. Last year, Chunghwa produced its first large-screen plasma television panels, and it is now Taiwan's largest manufacturer of the technology. While the technology matures and global demand grows, it makes sense to spin off this new business unit as well, Wu said.
The new flat-screen and plasma producers are expected to be listed on the Taiwan Stock Exchange, and the CRT company listed in China.
"Chunghwa's CRT production base has already moved to China, so it makes sense to list the company there," Wu said.
Analysts welcomed the move.
"I think the move will be successful in the long run, but it will have little immediate impact as the three business units are already managed independently," Wu said. She also issued a profit warning for this year, saying the new companies would only see improvements next year.
"The TFT-LCD market is still in a downturn -- demand for plasma displays is not growing quickly and the CRT market is continuing to decline," Wu said.
DisplaySearch forecasts that the global flat-screen display market will be worth US$31.9 billion this year, with local companies taking 37 percent of the total.
Taiwan produced only 2 percent of the world's 650,000 plasma panels last year. The global market is forecast to grow to 1.5 million this year, but Taiwan's share will not increase, DisplaySearch predicted.
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