A patent cross-licensing agreement signed by Taiwanese electronic paper display supplier E Ink Holdings Inc (元太科技) and Japan’s Sharp Corp is more a firewall against a patent war than a potential source of patent fee revenue, a Taipei-based analyst said.
“E Ink has not estimated patent fee revenue. We believe the intention of the contract is to prevent potential lawsuits over patent infringement,” Eric Kao, an analyst at KGI Securities (凱基證券) in Taipei, wrote in a recent note to clients.
“We don’t think the agreement will contribute meaningfully to E Ink’s earnings,” he said. “We hold our view that the company’s earnings in the second half will see limited growth, and that shares will continue to tread water.”
KGI maintained a stock rating of “neutral” for E Ink and a target price of NT$30. Shares of E Ink closed down 0.35 percent at NT$28.85 on Friday.
E Ink announced on Thursday that the company and its South Korean unit, Hydis Technologies Co, each signed 10-year patent authorization agreements with Japanese panel maker Sharp. E Ink and Sharp will have right to manufacture patented TFT-LCD and peripheral LCD technology products of the counter party within agreed terms and will be required to pay fees for the use of authorized patents.
In 2006, Sharp signed similar agreements with Taiwan’s AU Optronics Corp (AUO, 友達光電) and Chimei Innolux Corp (奇美電子) to prevent litigation over patent infringements, but the agreements never generated high revenues for the panel makers, Kao said.
E Ink also signed a patent deal with South Korean flat panel maker LG Display Co in 2009 and received a one-off patent fee of NT$300 million (US$10 million) before the agreement expired, he added.
One variable that could change the equation, Kao said, is Hydis’ fringe field switching (FFS) panel technology, which is an improved version of the wide-viewing angle in-plane switching technology developed by Sharp.
However, Kao said that because Apple Suppliers, such as Samsung Electronics Co, Toshiba Mobile Display Co, Sharp and AUO have not signed patent authorization agreements with Hydis, the technology has not become a requirement for Apple Inc’s iPhone and iPad.
“This suggests FFS is not an exclusive wide-viewing angle panel technology. Thus, Hydis won’t likely be entitled to high patent fees,” Kao said.
Jerry Su (蘇厚合), a research analyst at Credit Suisse, said the E Ink/Hydis announcement on patent cross-licensing with Sharp surprised the market because speculation had been focused on AUO licensing FFS technology from E Ink to supply the panel in Apple’s next-generation iPad mini.
“We estimate E Ink will book NT$461 million in FFS royalties income from Sharp’s shipments of Apple’s latest iPad [which incorporates FFS technology],” Su said in a separate note.
He expected E Ink’s projected rebound in the second half would remain intact despite delays in the introduction of new e-paper display products and said the company’s recovery will now be further supported by royalties from Sharp.
Nvidia Corp earned its US$2.2 trillion market cap by producing artificial intelligence (AI) chips that have become the lifeblood powering the new era of generative AI developers from start-ups to Microsoft Corp, OpenAI and Google parent Alphabet Inc. Almost as important to its hardware is the company’s nearly 20 years’ worth of computer code, which helps make competition with the company nearly impossible. More than 4 million global developers rely on Nvidia’s CUDA software platform to build AI and other apps. Now a coalition of tech companies that includes Qualcomm Inc, Google and Intel Corp plans to loosen Nvidia’s chokehold by going
DECOUPLING? In a sign of deeper US-China technology decoupling, Apple has held initial talks about using Baidu’s generative AI technology in its iPhones, the Wall Street Journal said China has introduced guidelines to phase out US microprocessors from Intel Corp and Advanced Micro Devices Inc (AMD) from government PCs and servers, the Financial Times reported yesterday. The procurement guidance also seeks to sideline Microsoft Corp’s Windows operating system and foreign-made database software in favor of domestic options, the report said. Chinese officials have begun following the guidelines, which were unveiled in December last year, the report said. They order government agencies above the township level to include criteria requiring “safe and reliable” processors and operating systems when making purchases, the newspaper said. The US has been aiming to boost domestic semiconductor
ENERGY IMPACT: The electricity rate hike is expected to add about NT$4 billion to TSMC’s electricity bill a year and cut its annual earnings per share by about NT$0.154 Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) has left its long-term gross margin target unchanged despite the government deciding on Friday to raise electricity rates. One of the heaviest power consuming manufacturers in Taiwan, TSMC said it always respects the government’s energy policy and would continue to operate its fabs by making efforts in energy conservation. The chipmaker said it has left a long-term goal of more than 53 percent in gross margin unchanged. The Ministry of Economic Affairs concluded a power rate evaluation meeting on Friday, announcing electricity tariffs would go up by 11 percent on average to about NT$3.4518 per kilowatt-hour (kWh)
OPENING ADDRESS: The CEO is to give a speech on the future of high-performance computing and artificial intelligence at the trade show’s opening on June 3, TAITRA said Advanced Micro Devices Inc (AMD) chairperson and chief executive officer Lisa Su (蘇姿丰) is to deliver the opening keynote speech at Computex Taipei this year, the event’s organizer said in a statement yesterday. Su is to give a speech on the future of high-performance computing (HPC) in the artificial intelligence (AI) era to open Computex, one of the world’s largest computer and technology trade events, at 9:30am on June 3, the Taiwan External Trade Development Council (TAITRA) said. Su is to explore how AMD and the company’s strategic technology partners are pushing the limits of AI and HPC, from data centers to