Thu, Feb 16, 2006 - Page 11 News List

Funai signs LCD deal with partner Chi Mei

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Funai Electric Co, the Japanese maker of Emerson, Sylvania and Symphonic electronics, said it will buy liquid-crystal displays (LCDs) from Chi Mei Optoelectronics Corp (奇美電子) to help secure screens used in televisions.

Under an agreement signed yesterday, Funai will lend US$400 million to Chi Mei over five years for the Tainan-based company to invest in LCD production, strengthening an existing alliance between them, according to a statement.

Shares of Funai rose 6.8 percent, the biggest gain since Nov. 11, to ?10,910 (US$92.81) at the 11am break on the Osaka Securities Exchange.

Buying panels from Chi Mei, the nation's second-biggest LCD maker, will help Funai meet its goal to triple television production next fiscal year.

The Osaka-based company's earnings have fallen amid a decline in prices. Funai this month lowered its full-year net income estimate for the year ending March 31 by 22 percent, the second cut this year.

Funai said it expects to sell about 600,000 televisions this fiscal year.

The company has lacked the scale to compete against rivals such as market leader Sharp Corp, which expects to sell 4 million LCD televisions in the year ending March.

To counter falling prices, Funai expects to boost LCD television output to about 2 million units next fiscal year, and forecasts sales to gain fourfold to about ?70 billion (US$595 million) as it brings out bigger and more expensive sets, executive vice president Yoshio Nakajima said at a Feb. 3 news conference.

Funai, which already buys panels from Chi Mei, did not say how many panels it would obtain through yesterday's loan agreement.

Nakajima earlier this month said the company is looking for alliances with "multiple" overseas companies.

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