E Ink Holdings Inc (元太科技), which supplies e-paper displays for Amazon’s e-readers, yesterday signed a patent cross-licensing agreement with local panel maker AU Optronics Corp (友達光電), paving the way for AU Optronics to make high-resolution LCD screens for tablets using E Ink’s technology.
AU Optronics is the second major LCD panel maker after Japan’s Sharp Corp to license the fringe field switching (FFS) panel technology from E Ink’s South Korean subsidiary, Hydis Technologies Co Ltd, in order to supply high-end panels to Apple Inc.
AU Optronics is the center of speculation that it is shipping LCD panels for Apple’s new and smaller tablet, the iPad mini, in preparation for a launch later this month. The firm has declined to comment on the speculation.
“Access to Hydis’ FFS LCD technology will allow AUO to supply products to some of the world’s leading brands,” AU Optronics president Paul Peng (彭雙浪) said in a statement released yesterday.
“The deal is a similar to one we made with Sharp earlier this year ... [This deal] will allow AU Optronics to produce LCD panels using FFS technology,” E Ink chairman Scott Liu (劉思誠) told a media briefing.
The patent agreement, which took effect on Aug. 1, will be in place for 10 years.
“The FFS panels will be used in tablets and high-end mobile phones. This is a similar deal to the one we made with Sharp earlier,” Liu said.
The strategic partnership would boost revenue and profit at Hydis, Liu said. He declined to disclose financial terms of royalty fees.
E Ink said the royalty payments from Sharp and AU Optronics would be shown in the company’s financial statement issued later this year.
Based on the agreement, AU Optronics is supplying LCD backplanes to E Ink for use in mobile devices.
E Ink makes LCD glass substrates in its factories and it buys backplanes from local panel makers to meet customer demand.
“We found that it is more cost-efficient to purchase LCD backplanes,” said E Ink spokesman Eddie Chen (陳彥松), when asked about the company’s e-paper display business. “Besides, we are trying very hard to keep pace with demand. We still cannot match customers’ voracious demand.”
Chen blamed a labor shortage in its Chinese factories for the supply issues.
The e-paper display business spiked last quarter, boosting the business’ contribution to more than half of E Ink’s total revenue, he said.
E Ink posted NT$3.32 billion (US$113 million) in revenue for the third quarter, down 26 percent from the second quarter’s NT$4.48 billion.
E Ink lost NT$1.6 billion in the first half of this year.
E Ink shares plummeted 5.62 percent to NT$30.2 yesterday, while AU Optronics shares inched up 0.98 percent to NT$10.35. The TAIEX fell 0.2 percent.