HannStar to sell plant to Wintek Corp

HannStar Display Corp (瀚宇彩晶), the nation's smallest maker of flat panels, yesterday agreed to sell a manufacturing plant to Wintek Corp (勝華), the nation's biggest mobile phone panel maker, for NT$6.1 billion (US$186 million) in cash and stock.

Under terms of the deal, Wintek will pay HannStar NT$5.2 billion in cash and 32 million common shares worth NT$900 million, or a 3.1-percent stake in Wintek, to HannStar in exchange for its third-generation (3G) plant.

With the cash injection, HannStar would be able to concentrate on manufacturing thin-film-transistor liquid-crystal-display (TFT-LCD) panels for computers and televisions, the company said.

"We are carefully considering recommencing construction of a next-generation plant some time next year as demand [for LCD TVs] looks quite good in the fourth quarter," HannStar chairman Chiao Yu-chi (焦佑麒) told reporters at a press briefing yesterday.

HannStar the construction of a sixth-generation (6G) plant in Tainan to cope with the recent overcapacity-driven downturn which began in the second quarter of last year.

Chiao that the 6G factory could be upgraded to a 7.5G factory to make larger-sized glass substrates for LCD TVs.

In turn, Wintek, the world's No. 2 supplier of handset panels, will increase production by an additional 55,000 sheets of 550mm by 660mm TFT-LCD panels per month.

Wintek makes 2.2 million mobile phone TFT-LCD panels a month.

"We have to increase capacity to cope with growing demand from customers as color TFT-LCD panels for handsets are rapidly replacing older panels," said James Chen (陳政慧), a Wintek financial executive.

Wintek it supplies panels to the world's three largest mobile phone vendors: Nokia Oyj, Motorola Inc and Samsung Electronics Co.

Eric Lin (林宜正), who tracks the flat-panel industry for Yuanta Core Pacific Securities (元大京華證券), said the deal would create a win-win situation for the companies.

"HannStar will be able to cut its losses and enhance its financial status by selling a loss-making plant," Lin said.

For Wintek, the new plant was a must for future growth, he said. However, he cautioned that the newly acquired plant would not become profitable right away.

"No capacity means no orders. However, I doubt Wintek will be able to land sufficient orders to fill the capacity of the new plant in the near term," Lin said.

HannStar it would book gains of NT$3.6 billion from the asset sale for this year.

"Now I am more certain that we will be able to get back in the black," HannStar president David Chou (周定輝) said.

HannStar posted a total loss of NT$12.35 billion over the past six quarters.