Innolux Display plans 2006 IPO

Innolux Display Corp (群創光電), Taiwan's latest company to make liquid-crystal displays (LCDs) used in computers, said it plans to sell its first shares publicly in 2006 to help raise funds for expansion.

The company will go public here, Innolux president Tuan Hsing-chien (段行建) said in an interview.

"It's still too early to say whether we'll seek an overseas listing," he said.

Hon Hai Precision Industry Co (鴻海精密) founded Innolux, the newest of the nation's six makers of computer-sized flat-panel displays. Hon Hai, the country's largest electronics company by sales, should help Innolux run at capacity next year, when rivals struggle to prevent losses because of excess production, analysts said.

"Hon Hai should be able to absorb all of Innolux's output," said Henry Wang, an analyst with WitsView Technology Corp (聯景科技) in Taipei. "Perhaps there will be a good story for the company's share sale after 2005."

Tuan declined to say how much would be raised from the sale.

Innolux will open its first two factories by the end of this year to make screens for desktop computer monitors and smaller products. A third plant will make color filters for the displays.

The company's plans come as Corning, the world's largest maker of glass used in the screens, said South Korean and Japanese flat-panel makers have slowed the opening of new factories because of overcapacity. Corning declined to say which companies have delayed their plans.

South Korea's Samsung Electronics Co, the world's biggest screen maker, and rivals may face losses in their display units by next year because of a supply glut that resulted from too much investment in the production of television-sized screens, investors and analysts said earlier this month.

Prices of LCDs are tumbling as consumers remain reluctant to pay up to US$5,000 for flat-screen TVs.

Consumers won't buy LCD TVs until the prices drop to about three times what it costs to buy a tube television, said investors such as Charles Isaac, who counts shares in AU Optronics Corp (友達光電) of Taiwan among the equivalent of US$11 billion that Zurich-based Swissca Portfolio Management invests in stocks globally.

"You can't make LCDs just for the sake of making LCDs," Tuan said.

For now, Innolux will focus on producing screens for desktop monitors, the biggest market for the panels, said Tuan, who was previously president of AU Optronics, the world's third-largest LCD maker.

Sales of LCDs measuring more than 10 inches diagonally will rise 50 percent to US$36 billion this year, with monitors accounting for more than half of total shipments, according to market researcher DisplaySearch.

Innolux will spend US$693 million to boost its output this year, the world's fourth-largest investment in the industry during the period, Texas-based researcher DisplaySearch said earlier. Innolux in March signed a NT$20 billion (US$590 million) loan to expand production.

Hon Hai earlier this year said it may increase its stake in Innolux to as much as a third from about 6 percent.

The company will sell its monitor screens exclusively to Hon Hai, Tuan said.

"Hon Hai's desktop monitor business is small now,"' Tuan said. "It'll grow quickly."

He declined to provide details.