Quanta Computer Inc (
"The complexity of the joint venture is greater than we expected," Quanta said in a statement released yesterday.
The two companies differ in their global positioning in the flat-panel television business and in issues such as organizational restructuring and these differences have prompted the postponement to next year, according to the statement.
In March, Quanta announced plans to join forces with Sanyo to establish a flat-panel TV venture in the third quarter, which would require initial capital of US$65 million. Shareholding details were not disclosed at the time.
The move reflected Quanta's attempt to cash in on the booming flat TV industry, which is set to expand rapidly over the next five years, Michael Wang (王震華), Quanta's chief operating officer, said on March 17.
The delay of the proposed venture was also apparently caused by weaker than anticipated market demand.
"Demand in Europe was weaker than expectated during the second quarter. But, at the moment, we will keep our forecast for global LCD TV sales at 42 million sets unchanged," said David Hsieh (謝勤益), a director of market researcher DisplaySearch's Taiwanese branch.
Recently, demand in the European and Chinese markets has started picking up, which would help shift inventory piled up during the last quarter and stabilize TV panel prices at US$350 per unit, Hsieh said.
Besides, second-tier TV vendors in North America planned to cut the prices of 32-inch and 37-inch TV sets to US$699 and US$999 to spur demand in the final quarter, Hsieh said.
Despite these market uncertainties, Quanta said its venture plans with Sanyo will be realized next year.
"Discussions are currently underway and we are working toward the goal of establishing the venture next year," Quanta's acting spokesperson Carol Hsu (許昭瑾) told the Taipei Times in a phone interview yesterday.
But for now, Sanyo will spin off development and purchasing operations of its TV business to put together a new company, tentatively called Sanyo Visual Technology Inc, in October.
Quanta will pump in ?85.5 million (US$740,000) for a 19 percent stake in the new company, which is to be based in North America.
Quanta will also offer its development resources to Sanyo Visual Technology and both will work on the purchase of materials and components, in order not to miss out on the year-end holiday shopping spree, Hsu said.
Quanta's shares closed down NT$0.4 percent at NT$46.4 yesterday on the Taiwan Stock Exchange. Shares of Sanyo rose 2.7 percent to ?26 yen on the Tokyo Stock Exchange. The announcement was made after markets closed in both Taipei and Tokyo.
"The postponement reveals that both firms are not yet fully ready to co-operate in the flat-panel TV industry. The October alliance will instead require less resources compared to the proposed venture," said David Chen (陳賜賢), an analyst with Taipei-based Market Intelligence Center (資訊市場情報中心).
The delay will not cause a stir in the market, considering the two firms are not major players in the flat-panel TV industry, he said.
As the venture will carry out both brand and contract production, this will limit the scope for expansion as there will be conflicts among contract clients, Chen added.