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Innolux Display invests US$10m in Chinese affiliate

Local flat-panel and PC monitor maker Innolux Display Corp (群創光電) said yesterday it had invested US$10 million in a Chinese affiliate as part of a broader China-bound investment project totaling US$90 million, and was evaluating further investment opportunities.

Innolux did not give details on the investment, but HSBC Securities regional flat panel industry analyst Frank Su (蘇穀祥) said in a client note that the investment would be mainly in a flat panel module assembling plant in Xiamen, Fujian Province.

“The Xiamen site is in an initial stage,” Innolux said in a filing to the Taiwan Stock Exchange.

Innolux also said it “is evaluating the timeline and amount for further investment.”

The company’s board approved a US$90 million investment plan on the Xiamen affiliate last year, Innolux said.

OPTOELECTRONICS

Innolux’s remarks came after the Chinese-language Commercial Times reported yesterday that Hon Hai Group (鴻海集團), parent company of Innolux, planned to spend 30 billion yuan (US$4.4 billion) this year on building an optoelectronics business cluster in Xiamen.

AU Optronics Corp (友達光電), Taiwan’s top liquid-crystal-display (LCD) maker, also picked Xiamen to build its latest panel module assembling plant. That plant started operating in 2007. AU Optronics also assembles panel modules in plants in Suzhou and Shanghai.

In Taiwan, Innolux is building a new sixth-generation (6G) plant to make TV panels. The plant is scheduled to start mass production this quarter.

However, HSBC downgraded its rating for Innolux to “underweight” last week because the stock price has climbed fast based on company’s robust prospects for this year.

Su suggested investors switch their holding to AU Optronics, which is HSBC’s top pick in the panel industry. He expects Innolux to start booking profits this quarter, one quarter earlier than the nation’s major flat panel makers.

PANEL PRICE HIKES

Separately, market researcher DisplaySearch said panel suppliers hiked prices for LCD panels used in PC monitors and TVs ranging from US$1 to US$7 per unit in the second half of this month from two weeks ago because of a faster-than-expected increase in demand primarily from China has caused supply constraint.

Su expects the uptrend to carry into September or October.

Another research house, WitsView, said prices for TV and PC panels rose by 1 percent to 3 percent in the second two weeks of this month, from the first half.

Shares of Innolux rose 3.01 percent to 46.15 yesterday. The stock prices of the nation’s two biggest panel makers, AU Optronics and Chi Mei Optoelectronics Corp (奇美電子), increased 0.28 percent and 6.42 percent to NT$36 and NT$19.9 respectively.
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