Teco discusses partnership with Konka

Teco Electric and Machinery Co (東元電機) is in talks with Konka Group Co Ltd (康佳) to supply flat-panel televisions and handsets to China's third-largest consumer electronics vendor, a Teco executive said yesterday.

"We're optimistic about cooperation as the first-round of talks proceeded smoothly in Taipei. Now we're entering into the stage of drawing up concrete terms," said Teco vice chairman Lin Sheng-chuan (林勝泉).

Konka's visit showed that it is aggressively seeking an alliance with Taiwanese companies to strengthen its presence and to expand in overseas markets.

"I believe we have ample room to collaborate in the areas of flat-screen TVs ... and mobile phones," Lin said.

Teco, which in 2002 became the first Taiwanese manufacturer to develop liquid-crystal-display TVs, is scheduled to lead a delegation to visit the Shenzhen-based company to discuss the details later this month.

The partnership would come on the heels of an alliance created by Konka's larger Chinese rival, TCL Corp, teaming up with Sampo Corp (聲寶), one of Taiwan's leading TV makers, to sell plasma-display-panel (PDP) TVs.

TCL acquired Thomson AG last year.

Lin said Teco may follow the TCL-Sampo model and work with Konka to make inroads into overseas markets and the China market.

"Now that TCL has picked a Taiwanese partner to market its products worldwide, Konka certainly will follow suit," said Ken Ko (柯維華), an analyst with the Taipei-based Topology Research Institute (拓墣產業研究所).

Chen Yen-liang (陳彥良), an analyst with Yuanta Core Pacific Capital Management (元大京華投顧), said, "The agreement will help Teco gain a better position in the fight to grab a share in China, one of the world's fastest-growing consumer-electronics markets."

Teco expects the audio-visual business to account for 15 percent of total sales this year, from single-digit percentage points last year, according to Lin.

In the first four months of this year, Teco posted consolidated sales of NT$9.14 billion, up about 30 percent from NT$6.97 billion a year ago.

The Taoyuan-based company expects LCD-TV shipments to reach 150,000 units in the second half of this year after a 50,000 units were shipped in the first five months. It expects an increase in demand due to TV replacement ahead of the UEFA Championships and the Athens Olympics.