Fri, Jun 25, 2004 - Page 10 News List

Merck to break ground in Taoyuan

EXPANSION The German company plans to use a NT$900 million investment to set up an integrated manufacturing and R&D center for liquid crystals

By Lisa Wang  /  STAFF REPORTER

Merck KGaA, the world's biggest supplier of liquid crystals, is slated to conduct the ground-breaking ceremony for its new plant in Taoyuan County today.

The Frankfurt-based company's NT$900 million (US$26.8 million) investment forms part of its plan to grab a bigger slice of the nation's thriving flat-screen sector.

It is the latest in a series of investments from foreign suppliers of equipment and components for flat-panel displays.

Earlier this month, flat-screen equipment maker Unaxis Holding AG announced plans to invest NT$1 billion to expand its local facilities.

Merck plans to set up an integrated manufacturing and R&D center for liquid crystals in Tao-yuan County. The center will also handle sales and marketing, said Thomas Lee (李詩禮), president of Merck Display Technologies Ltd, a local arm of Merck KGaA, at a press conference yesterday.

"One of the major reasons for us to start a local production line is that Taiwanese makers are holding an edge to outpace South Korean companies in the [liquid crystal display] LCD panel area," Lee said.

Local manufacturers of LCD panels, led by AU Optronics Corp (友達光電), are expected to outstrip their South Korean rivals in the third quarter of this year by taking a hefty 39.1 percent of the global market in the large-screen sector, according to a forecast last month by market researcher DisplaySearch.

Merck is scheduled to start using the new facilities by the end of next year. By 2007, it hopes to fully supply liquid crystals to its local customers, which include AU Optronics and Chi Mei Optoelectronics Corp(奇美電子), from its local production.

Merck has been importing these materials from its Japanese plants. Taiwanese flat-screen makers rely on Merck and Japan's Chisso Corp, Dainippon Inc and Chemicals Inc to supply liquid crystals.

Merck has no plan to build factories in China in the short term, Lee said. It will use the Taoyuan factories to supply Taiwanese panel-makers' Chinese operations, he added.

A 15-inch LCD panel for a computer monitor requires about 1g of the pricey liquid crystals, which currently cost US$5 to US$7 per gram for less advanced twisted-nematic panels, Lee said.

Backed by the growing demand for liquid crystals, Merck Display's sales could double to NT$13 billion this year over last year's figures, Lee said.

Merck's new investment is expected to strengthen its market position here, an analyst said. Itnow holds 69 percent of the global liquid-crystal market.

"I don't expect local flat-screen panel makers will save much, as Merck is unlikely to drastically cut prices after shifting manufacturing to Taiwan," said Roger Yu (游智超), an industry analyst with Polaris Securities Co (寶來證券).

Liquid-crystal materials only make up 5 percent of a panel's cost, he added.

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