Smaller Taiwanese liquid crystal display (LCD) makers such as Chunghwa Picture Tubes Inc (中華映管) are facing mounting pressure to merge with bigger players as competition intensifies, industry watchers say.
Speculation about possible consolidations has heated up recently as smaller players face growing difficulty raising funds needed to finance expanding capacity, which they need to do in order to survive.
"Merging for growth seems to be an easy solution for present difficulties," said Naiwen Kerr, an analyst with Lehman Brothers in a report released last Friday.
"We think the most likely M&A [merger and acquisition] deal will occur in the smaller companies," Kerr said.
It would make the best sense for the No.3 player, Chunghwa Picture Tubes, to merge with Quanta Display Inc (廣輝), or for the No.2 LCD panel maker Chi Mei Optoelectronics Corp (奇美電子) to acquire Quanta Display, he said.
Quanta Display and Chunghwa Pictures said last month they were just in the initial stage of merger talks, and no substantial progress had been made. They made the comment after reports appeared in the Chinese-language newspapers about a possible link-up.
Quanta Display, a LCD panel manufacturing unit of the world's biggest contract laptop computer maker, Quanta Computer Inc (廣達電腦), has the best pricing power in M&A talks given its focus on notebook panels, Kerr said.
Most of Quanta Display's production goes to Quanta Computer, which supplies notebook computers for some of the world's biggest computer vendors, including Hew-lett Packard Corp.
Pressure from the increasing competition posed by Chinese LCD panelmakers will accelerate consolidation among local players, said Frank Su (蘇穀祥), who tracks the LCD industry for BNP Paribas Securities.
"Taiwanese second-tier panel makers, particularly Chunghwa Picture Tubes and HannStar Display Corp (瀚宇彩晶), will face competitive pressure from new Chinese entrants, who will catch up soon," Su said at a forum on the LCD industry in Taipei last Friday.
All Chinese newcomers, including SVA-NEC LCD Co (上海廣電) and BOE-Hydis (京東方), will focus on fifth-generation factories over the next three years, which implies that their business should concentrate on monitor panels, or possibly notebook computer panels, he said.
Both HannStar and Chunghwa have been focusing on panels for computer monitors and have been slow to expand to bigger screens for TVs.
Su said he expects to see a merger in the industry within a year.
Kerr has upgraded his ratings on Quanta Display to 2-Equal weight as the stock has been traded down close to book value.
He also upgraded Chunghwa Picture Tubes to 2-Equal weight saying cheap valuation and meaningfully large capacity provide a good incentive for M&A, which could be a short-term catalyst for the stock to perform.
purpose: Tesla’s CEO sought to meet senior Chinese officials to discuss the rollout of its ‘full self-driving’ software in China and approval to transfer data they had collected Tesla Inc CEO Elon Musk arrived in Beijing yesterday on an unannounced visit, where he is expected to meet senior officials to discuss the rollout of "full self-driving" (FSD) software and permission to transfer data overseas, according to a person with knowledge of the matter. Chinese state media reported that he met Premier Li Qiang (李強) in Beijing, during which Li told Musk that Tesla's development in China could be regarded as a successful example of US-China economic and trade cooperation. Musk confirmed his meeting with the premier yesterday with a post on social media platform X. "Honored to meet with Premier Li
ARTIFICIAL INTELLIGENCE: The chipmaker last month raised its capital spending by 28 percent for this year to NT$32 billion from a previous estimate of NT$25 billion Contract chipmaker Powerchip Semiconductor Manufacturing Corp (力積電子) yesterday launched a new 12-inch fab, tapping into advanced chip-on-wafer-on-substrate (CoWoS) packaging technology to support rising demand for artificial intelligence (AI) devices. Powerchip is to offer interposers, one of three parts in CoWoS packaging technology, with shipments scheduled for the second half of this year, Powerchip chairman Frank Huang (黃崇仁) told reporters on the sidelines of a fab inauguration ceremony in the Tongluo Science Park (銅鑼科學園區) in Miaoli County yesterday. “We are working with customers to supply CoWoS-related business, utilizing part of this new fab’s capacity,” Huang said, adding that Powerchip intended to bridge
Dutch brewing company Heineken NV on Friday announced an investment of NT$13.5 billion (US$414.62 million) over the next five years in Taiwan. The first multinational brewing company to operate in Taiwan, Heineken made the statement at a ceremony held at its brewery in Pingtung County. It also outlined its efforts to make the brewery “net zero” by 2030. Heineken has been in the Taiwanese market for 20 years, Heineken Taiwan managing director Jeff Wu (吳建甫) said. With strong support from local consumers, the Dutch brewery decided to transition from sales to manufacturing in the country, Wu said. Heineken assumed majority ownership and management rights
Microsoft Corp yesterday said that it would create Thailand’s first data center region to boost cloud and artificial intelligence (AI) infrastructure, promising AI training to more than 100,000 people to develop tech. Bangkok is a key economic player in Southeast Asia, but it has lagged behind Indonesia and Singapore when it comes to the tech industry. Thailand has an “incredible opportunity to build a digital-first, AI-powered future,” Microsoft chairman and chief executive officer Satya Nadella said at an event in Bangkok. Data center regions are physical locations that store computing infrastructure, allowing secure and reliable access to cloud platforms. The global embrace of AI