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Innolux seeks bank loans to fund new plant construction

Innolux Display Corp (群創光電), the world's second-biggest maker of liquid-crystal-display (LCD) monitors for PCs, yesterday said that it was seeking NT$25 billion (US$815 million) in syndicated bank loans to fund the construction of a new plant to match growing customer demand.

Innolux, an affiliate of Hon Hai Group (鴻海集團), makes LCD panels to support its monitor and television manufacturing business at a 4.5-generation (4.5G) and a fifth-generation (5G) plant in Miaoli County.

Yesterday, the company said it planned to raise NT$25 billion in syndicated loans from unspecified banks to partly finance the construction of a sixth-generation (6G) factory.

"The monitor market is growing and our market share is also expanding," Innolux chief financial officer Thomas Hsu (許嘉成) said by telephone.

To improve its cost efficiency, Innolux aims to produce 40 percent of its LCD panels in its own plants, but the company predicts that current capacities will not be able to reach the long-term goal, Hsu said.

The company's current production could only supply a third of the total flat panels it needs by the end of the year, Hsu said.

Innolux planned to make 90,000 sheets of 1,500mm by 1,850mm flat panels a month in the second quarter of next year and then increase monthly production to 120,000 sheets by the end of 2010, Hsu said.

The new factory is designed for making monitor panels and TV panels, Hsu said.

In addition to the planned bank loans, Hsu said Innolux had NT$50 billion cash on hand and US$1.35 billion in proceeds from issuing global depository receipts in November to help finance the construction.

Innolux supplies PC monitors to major PC vendors including Acer Inc, Dell Inc, Hewlett Packard Co and Samsung Electronics Co, according to market researcher DisplaySearch.

Innolux seized a 17 percent share of the 43 million monitors made during the quarter, trailing behind TPV Technology Ltd (冠捷科技), which had 22 percent, DisplaySearch said.
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