Hon Hai to enter LCD-TV business

Hon Hai Precision Industry Co (鴻海精密), the nation's largest maker of electronics components, will ramp up its diversification into the booming liquid-crystal-display (LCD) TV market to tap into new growth areas, according to a local media report yesterday.

The firm expects flat-screen TVs to become one of its growth engines, with sales of LCD TVs estimated by research institutes such as the Taipei-based Topology Research Institute (拓墣產業研究所) and the Austin, Texas-based DisplaySearch to more than double to around 42 million units this year from last year.

To grasp the business opportunity, Hon Hai plans to set up a new business group in charge of LCD TV manufacturing and even LCD panel-making, the Chinese-language Commercial Times reported yesterday, without citing sources.

The report also said that Lu Po-yen (盧伯彥), a former vice president of AU Optronics Corp (友達光電), would lead the new business group. Lu last month left his job at AU Optronics, which is the nation's top LCD panel maker.

Hon Hai spokesman Edmund Ting (丁祈安) was not available to comment about the report as of press time yesterday.

Shares of Hon Hai dropped 3.1 percent to close at NT$187 (US$5.72) on the Taiwan Stock Exchange, amid negative market sentiment after global crude oil prices surged to a new record, prompting investors to worry about slower consumer demand.

Hon Hai is already in the LCD panel business, as the company owns an LCD panel manufacturing affiliate, Innolux Display Corp (群創), which manufactures panels and assembles computer monitors for Dell Inc and other big companies. But the latest move indicates the company's attempt to enter the more promising LCD TV making segment, an analyst said.

"Hon Hai has been preparing to tap into LCD TVs for the past years. The time seems to be ripe for Hon Hai to make a big move now," said Simon Yang (楊勝帆), a consumer electronics analyst at Topology Research.

Yang expected the TV manufacturing business to start making a significant contribution to Hon Hai's revenues next year.

The analyst said that Hon Hai is planning to gradually increase its focus on consumer electronics manufacturing in the hope that the new business will overtake the computer sector as its main growth driver.

Hon Hai now assembles mobiles for Nokia Oyj, makes iPod music players for Apple and makes game consoles for the Japanese consumer electronics giant Sony Corp.

Last month, Hon Hai announced a plan to acquire the nation's biggest digital camera maker, Premier Image Technology Corp (普立爾).