China Motor Corp's (中華汽車) decision to bail out the ailing Mitsubishi Motors Corp raised concern among industry watchers yesterday due to what they called the slim possibility of a turnaround for Japan's fourth-largest automaker.
"I hold a negative view on China Motor's move. There's risk in there. The investment could end up accomplishing nothing, because it will be a tough job for Mitsubishi's management to save the company," said Liu Che-wei (劉哲維), an auto analyst with Polaris Securities Co (寶來證券).
Mitsubishi currently holds a stake of about 14 percent in the Taoyuan-based commercial car maker, which relies heavily on the Japanese firm for technology support.
Raising eyebrows at China Motor's proposed aid package of ?10 billion (US$88 million), Liu warned that Mitsubishi could be a drag for the nation's second-largest automaker in the long term, if the restructuring plan falls through and results in higher levels of debt.
To reduce losses from its Asian units, DaimlerChrysler AG, which now holds a controlling 37 percent stake in Mitsubishi, refused to offer more financial support to the Tokyo-based company last month, Liu added.
China Motor announced on Friday that it would contribute ?10 billion to Mitsubishi as part of the troubled automaker's ?450 billion revival plan.
"The investment will deepen China Motor's three-decade-long partnership with Mitsubishi. It will bring closer cooperation with Mitsubishi in the fast-growing Chinese auto market," China Motor spokesman Hsu Li-min (
Separately, China Motor formed a joint venture with DaimlerChrysler last year to produce sedans in China. The plant is scheduled to start operations next year with an annual output of 400,000 vehicles.
China Motor's decision is likely to trigger a mild sell-off today on doubts over the investment, although the financial support could win the smaller Taiwanese automaker a say in discussions over new car models, Liu predicted.
Stock prices of China Motor rebounded 2.95 percent, or NT$1.3, to NT$45.3 on the benchmark TAIEX on Friday. China Motor shares have plunged nearly 40 percent in the past two months.
"I'm slightly concerned about China Motor's decision to help Mitsubishi," said Tony Tsai (蔡東松), a director of Taiwan Ratings Corp (中華信評), a local arm of ratings agency Standard and Poor's.
"It will not damage companies like China Motor, which is flush with cash, but you can't bank on any return on the investment," Tsai said.
With the revival plan, Mitsubishi hopes to return to profitability in 2006 by expanding its auto sales around the world.
In the first quarter of this year, China Motor said earnings were flat at NT$1.98 billion, compared to NT$1.95 billion a year ago.
China has claimed a breakthrough in developing homegrown chipmaking equipment, an important step in overcoming US sanctions designed to thwart Beijing’s semiconductor goals. State-linked organizations are advised to use a new laser-based immersion lithography machine with a resolution of 65 nanometers or better, the Chinese Ministry of Industry and Information Technology (MIIT) said in an announcement this month. Although the note does not specify the supplier, the spec marks a significant step up from the previous most advanced indigenous equipment — developed by Shanghai Micro Electronics Equipment Group Co (SMEE, 上海微電子) — which stood at about 90 nanometers. MIIT’s claimed advances last
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) has appointed Rose Castanares, executive vice president of TSMC Arizona, as president of the subsidiary, which is responsible for carrying out massive investments by the Taiwanese tech giant in the US state, the company said in a statement yesterday. Castanares will succeed Brian Harrison as president of the Arizona subsidiary on Oct. 1 after the incumbent president steps down from the position with a transfer to the Arizona CEO office to serve as an advisor to TSMC Arizona’s chairman, the statement said. According to TSMC, Harrison is scheduled to retire on Dec. 31. Castanares joined TSMC in
EUROPE ON HOLD: Among a flurry of announcements, Intel said it would postpone new factories in Germany and Poland, but remains committed to its US expansion Intel Corp chief executive officer Pat Gelsinger has landed Amazon.com Inc’s Amazon Web Services (AWS) as a customer for the company’s manufacturing business, potentially bringing work to new plants under construction in the US and boosting his efforts to turn around the embattled chipmaker. Intel and AWS are to coinvest in a custom semiconductor for artificial intelligence computing — what is known as a fabric chip — in a “multiyear, multibillion-dollar framework,” Intel said in a statement on Monday. The work would rely on Intel’s 18A process, an advanced chipmaking technology. Intel shares rose more than 8 percent in late trading after the
FACTORY SHIFT: While Taiwan produces most of the world’s AI servers, firms are under pressure to move manufacturing amid geopolitical tensions Lenovo Group Ltd (聯想) started building artificial intelligence (AI) servers in India’s south, the latest boon for the rapidly growing country’s push to become a high-tech powerhouse. The company yesterday said it has started making the large, powerful computers in Pondicherry, southeastern India, moving beyond products such as laptops and smartphones. The Chinese company would also build out its facilities in the Bangalore region, including a research lab with a focus on AI. Lenovo’s plans mark another win for Indian Prime Minister Narendra Modi, who tries to attract more technology investment into the country. While India’s tense relationship with China has suffered setbacks