Chi Mei to sell Japanese unit to Sony

MANUFACTURING: In a US$177 million deal, the nation's second-largest maker of LCD panels will offload its subsidiary IDTech, which it said had become a burden


Sat, Jan 08, 2005 - Page 10

Chi Mei Optoelectronics Corp (奇美電子), Taiwan's second-largest maker of liquid-crystal display (LCD) panels, agreed to sell its Japanese subsidiary to Sony Corp, the companies said in a joint statement released yesterday.

Chi Mei, based in Tainan, will sell all shares in International Display Technology (IDTech) to Sony for ?18.5 billion (about US$177 billion), according to the statement.

The deal is expected to close in March of this year, the statement added.

"The deal will have a positive effect on Chi Mei, as the less-effective plant owned by IDTech has become a burden for Chi Mei," said Tim Chen (陳建光), an analyst with CLSA Ltd in Taipei.

Chen added that the offer was quite reasonable, as the price corresponded with the ?18 billion Chi Mei paid for IDTech equipment in 2001.

Chi Mei said yesterday that its consolidated sales reached NT$8.14 billion (US$253 million) last month, down 22.4 percent from December a year ago and 14.1 percent lower than November's figure. For the whole of 2004, the company's revenues amounted to NT$119.26 billion, with output of large flat panels totalling 14.16 million units.

Chi Mei's strong rival AU Optronics Corp (友達光電) yesterday reported its consolidated sales last month rose 12.1 percent to NT$13.34 billion from a year ago. For the whole of last year, the company saw revenues of NT$165 billion, up 69.1 percent from 2003, with output of large flat panels totalling 18.85 million units.

On the local bourse, shares of Chi Mei closed down 2.5 percent at NT$39.5, while that of AU Optronics was also down 2.5 percent to NT$41.8.

Chi Mei's sale of its IDTech unit to Sony will complement the Japanese company's present low-temperature polysilicon (LTPS) thin-film transistor (TFT) and LCD manufacturing base, which was established in 1997 as the STLCD Corp, to provide flat panels for mobile products, including cellphones and digital cameras, Sony said in the statement.

STLCD Corp is a joint venture between Sony and Toyota Industries Corp.

Commercial mass production for LTPS-TFT-LCD display panels is scheduled to start in April 2006, according to Sony.

The Japanese consumer-electronics manufacturer is making more of its own components to make it tougher for rivals to copy its technology and help counter falling prices.

The purchase will make it easier for the company to develop new products to meet growing demand, said Harumi Asai, a Sony spokeswoman in Tokyo.

"It adds to our flexibility," Asai said. "If we have to purchase components we often have to disclose some of our intellectual property and we want to limit that."

Global digital camera shipments are expected to rise 22 percent to 83.4 million units this year, according to New York-based market researcher International Data Corp.