Thu, May 22, 2003 - Page 10 News List

Hon Hai breaks ground on new plant

By Bill Heaney  /  STAFF REPORTER

Taiwan's largest maker of computer components, Hon Hai Precision Industry Co (鴻海精密), broke ground on an advanced fifth-generation flat-panel display manufacturing plant yesterday.

The plant is to be constructed in Miaoli's Chunan Science-based Industrial Park (竹南科學園區) in a move that is expected to propel the technology giant into the manufacture of full computer systems. The new company, Innolux Display Corp (群創光電), aims to start producing panels by the fourth quarter of next year.

Analysts welcomed the news yesterday.

"In my opinion, they're doing the right thing," said Frank Su (蘇穀祥), an analyst at BNP Paribas in Taipei.

"In the future all chips including the central processing unit and memory will be built onto the panel," the analyst said.

Hon Hai's chairman Terry Kuo (郭台銘) is targeting the future "system-on-panel" market. Future computer systems integrated into the central panel of the flat screen should hit the mainstream market in around three years, which explains why Hon Hai is eager to enter the flat-panel industry now, Su said.

Hon Hai also announced yesterday it plans to invest in chipmaker Fox Semicon Integrated Tech Inc (沛鑫半導體), which is expected to provide the chip technology that will be integrated into Innolux's panels for the future systems.

Chips produced by Fox Semicon are currently shrouded in secrecy, as they may be attempting to protect intellectual property, according to Su.

Another analyst has also had difficulty finding out about the chipmaker.

"Fox Semicon is a new investment developing new products, so Hon Hai and Fox Semicon are not disclosing much information," said William Fong (方偉昌), an analyst at Primasia Securities Co.

As early as 1998, Japan's Sharp Corp developed a flat-screen display that integrated into the panel the silicon chips needed to drive the images and video on the display. Sharp's continuous grain silicon (CGS) TFT-LCD paints circuits onto the fabric of the panel, eliminating the need for a separate piece of silicon in the body of the display and making it much faster.

The opening of a flat-panel factory also acts to plug a hole in Hon Hai's supply chain.

"Until now Hon Hai has been able make all the components for a full computer system, except for the thin-film transistor liquid crystal display (TFT-LCD) panel," Fong said.

"Now they can produce full systems and computer and TV displays. This move gives them a more stable supply of flat panels," he said.

Hon Hai will invest a total of NT$10 billion in the Innolux TFT-LCD panel factory this year, a source at the company told the Taipei Times yesterday on condition of anonymity.

Hon Hai will inject a total of NT$5 billion into Fox Semicon and NT$35 billion into Innolux, a joint statement from the three companies said yesterday without giving a timeframe for the investments.

Chinese-language media speculated yesterday that Hon Hai chairman Kuo would kick in half the investment cash himself.

Kuo has deep pockets, ranking 256th on this year's Forbes magazine list of billionaires with a personal fortune of an estimated US$1.6 billion.

Hon Hai spokesman Edmund Ding (丁祈安) did not return repeated telephone and e-mail requests for comment yesterday.

The news comes as the government-funded Market Intelligence Center reported yesterday that Taiwan shipped 7.28 million flat panels in the first quarter of this year.

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