Thu, Feb 24, 2005 - Page 10 News List

Prime View inks filter pact with Sumitomo unit

LCD SCREENS The Japanese company plans to use a Hsinchu factory to produce color filters, which the Taiwanese firm will get at a discount


Prime View International Co (元太科技), a leading maker of smaller flat screens for portable DVD players, yesterday said it has signed an agreement with Japan's Sumitomo Chemical Co to secure sufficient supply of key components.

Under the deal, Prime View will offer an idle factory in Hsinchu for Sumitomo Chemical to produce color filters used in smaller liquid crystal display (LCD) screens for DVD players, digital cameras, Prime View vice chairman Scott Liu (劉思誠) said yesterday.

The Tokyo-based chemical conglomerate will supply the 90-percent color filters Prime View needs from the Hsinchu plant after the factory starts production in the fourth quarter of this year, Liu said.

"The cooperation will reduce the need for a huge investment in building a new factory [for color filters] and save on material costs for Prime View," Liu said.

Prime View will get a sufficient supply of color filters from Sumitomo Chemical at 15 percent discount, he said.

Liu's comments came one day after the companies signed a contract in Hsinchu, wrapping up six months of negotiations.

The Japanese company announced last month it planned to invest ?5 billion (US$47.9 million) in building a new factory here with an output capacity of 50,000 color filters a month, according to a Reuters' report. Prime View said yesterday that it was not involved in that investment.

The supply agreement comes as Prime View is betting on improving market demand for smaller LCD panels.

"We are bullish about the market growth this year," Liu said.

Built on that optimism, Prime View expects shipments for this year increase 30 percent at an annual pace, Liu said.

Global demand for LCD panels smaller than 10 inches is expected to expand by about 30 percent from 428 million last year to 549 million units this year, according to a forecast by market researcher DisplaySearch.

Liu declined to say whether the company expects a return to profitability this quarter after losing money in the fourth quarter last year as panel prices crumbled.

Liu said the company believes it has seen an end to falling prices because the more than 40 percent price drop quarter on quarter for mainstream 7-inch LCD screens has driven prices below certain companies' cost.

"Some companies have recently been considering hiking prices," Liu said, adding that demand is expected to remain lukewarm in the first quarter.

Last quarter, Prime View posted a greater than expected loss of NT$49 million after prices for 7-inch screens fell more than 40 percent. Last year, however, was still a profitable one as the firm earned NT$1.82 billion, or NT$4.06 per share, on sales of NT$12.05 billion.

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