Chi Mei accuses LG Philips of infringing four of its patents

Chi Mei Optoelectronics Corp (奇美電子), the nation's second-biggest maker of liquid-crystal-display (LCD) panels, yesterday said it filed a lawsuit in the US against bigger competitor LG Philips LCD Co (LPL) for patent infringement.

The Tainan-based flat panel maker claimed that LPL, a joint venture between South Korea's LG Electronics Inc and Royal Philips Electronics NV of the Netherlands, had illegally used four patents held by Chi Mei.

This is the first patent lawsuit initiated by Chi Mei, said Loreta Chen (陳靜燕), a Chi Mei public relations official.

In the past, Chi Mei and its local peers were the legal targets of its bigger competitors.

Chi Mei filed the complaint in a court in Marshall, Texas, last Friday, claiming LPL had infringed on intellectual property rights by using LCD technologies owned by the Taiwanese firm without its permission, Chen said.

Chen declined to comment on whether Chi Mei was seeking cash compensation.

Chi Mei also announced yesterday that sales last month rose 35 percent to NT$17.6 billion (US$529 million) from a year earlier. Panel shipments reached 3.56 million last month, up 58 percent from a year earlier.

Chen added that the company had no plans of raising funds overseas to support its TV panel production expansion.

Chen's remarks came in the wake of a Bloomberg report yesterday that the company was considering an overseas issue to help finance the estimated US$3 billion needed to build a new LCD factory to make TV screens, citing Chi Mei chairman chairman Frank Liao (廖錦祥) as its source.

The company issued a statement saying that the Bloomberg report "misinterpreted" the chairman's comments, "leading to market speculation" about a "potential DR [depositary receipt] issuance by the company."

Chi Mei said it did not "have any plan for equity fundraising this year," adding that it had signed several bank syndication loans that would help finance the construction of new plants.

During the interview with Bloomberg on May 3, Liao was quoted as saying: "We have to think about all financing tools ... Investment is huge in the LCD panel industry."

Chi Mei told investors late last month that it planned to ramp up its new 7.5-generation (7.5G) factory on stronger-than-expected demand for 40-inch and bigger-size TV panels.

The company also said that it planned to spend less this year, up to NT$75 billion (US$2.26 billion), on new facilities and equipment, compared with capital expenditure of NT$110 billion last year. Using the new 7.5G factory to cut 42-inch and 47-inch TV panels from 1950mm x 2,250m glass substrates should raise production efficiency.

Chi Mei said mass production at the new plant should commence next month, with monthly output expected to reach 50,000 sheets by the end of the year and 1 million sheets next year.

Shares of Chi Mei dropped 0.51 percent to NT$38.8, underperforming local rival AU Optronics Corp's (友達光電) 0.18 percent loss and the benchmark index's 0.24 percent decline.