Wed, May 03, 2006 - Page 12 News List

Panel makers looking for LED connections

By Jessie Ho  /  STAFF REPORTER

With light emitting diode (LED) backlights soon to replace traditional cold cathode fluorescent lamp (CCFL) backlights in liquid-crystal displays (LCDs), the nation's major flat-panel makers are looking for partnership opportunities with LED manufacturers.

Chi Mei Optoelectronics Corp (奇美電子), Taiwan's second-largest flat panel maker, has acquired a 25 percent stake in LED wafer and chip manufacturer Formosa Epitaxy Inc (FOREPI, 璨圓光電), and might obtain three out of seven seats on FOREPI's board during the board meeting next month, according to a Chinese-language newspaper last week.

The report coincided with the resignation of four directors on FOREPI's board last Thursday.

The one remaining vacancy is expected to be filled by CID Investment (華威創投), also an investor of FOREPI.

As Quanta Computer lnc (廣達電腦) is one investor of CID Investment, the deal could also benefit the world's biggest contract laptop computer maker.

Chi Mei said that as of last Friday, it held a 2 percent stake in FOREPI, or 2.295 million common shares, plus NT$46.784 million (US$1.46 million) in convertible bonds.

"The investment is positive for Chi Mei," Lin Yi-chen (林宜蓁), an analyst at Capital Securities Corp (群益證券), said yesterday.

Chi Mei recently revealed its ambition to make inroads into the LED sector by announcing plans to mass produce 32-inch LED-backlit flat panels for TVs starting in the fourth quarter of the year, with FOREPI among the list of companies with which it plans to work.

Chi Mei is lagging behind in LED technology, and FOREPI, which is known for its edge in high power green LED, will make up the shortage, Lin said.

Moves by larger rival AU Optronics Corp (AUO, 友達光電), the world's third-biggest maker of LCDs, also prompted Chi Mei to aggressively seek mergers and acquisitions to boost its product lines and margins, Lin said.

AU Optronics announced last month that it would take over smaller rival Quanta Display Inc (廣輝電子) for US$2.2 billion in stock, widening its lead over Chi Mei.

AUO is reportedly shopping for LED companies to buy and potential candidates include Tekcore Co (泰谷光電) and Uni Light Technology (洲磊科技).

Shares of FOREPI rose by the 7 percent daily limit to close at NT$29.7 on the Taiwan Stock Exchange yesterday.

Chi Mei's shares rose NT$0.15 to NT$45.5, while AU Optronics advanced NT$0.2 to NT$52.5

According to the latest report by DisplaySearch Inc, LED backlights will begin to replace CCFL backlights in LCDs starting in the second half of this year.

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