Elan takes Egalax and Chinese distributor to court

By Kevin Chen  /  Staff reporter

Tue, Apr 02, 2013 - Page 14

Touch-panel controller chip manufacturer Elan Microelectronics Corp (義隆電子) yesterday said it had sued a Taiwanese company and its Chinese distributor in a Beijing court for patent infringement.

In a filing to the Taiwan Stock Exchange, Elan Microelectronics accused Egalax Empia Technology Inc (禾瑞亞科技) and Beijing Guanglong Xinchuang Technological Development Co (北京廣龍新創科技) of infringing a patent it owns that is related to capacitive touch technologies.

Elan said it had asked the Second Intermediate People’s Court of Beijing to order the accused companies to immediately cease all activities involving the patented technology.

The controller chip maker, which supplies touch-screen driver integrated circuits (IC) for Google Inc’s Nexus 7 tablets, said it also demanded the accused companies pay damages for the financial losses incurred by the infringement.

Elan did not say how much compensation it was asking for.

The lawsuit against Egalax Empia, which is an IC design and systems integration company, is the second that Elan has filed against it this year. On March 7, Elan filed a complaint with Taiwan’s Intellectual Property Court alleging that its local rival infringed another patent related to capacitive touch.

Also last month, Elan sued Suzhou-based Pixcir Microelectronics Co (瀚瑞微電子) for infringing a similar patent.

Elan has pinned its hopes on strengthening its patent portfolio in the fight for dominance in the booming touch controller IC business.

The firm is also hoping that consumer demand for Microsoft Corp’s new Windows 8 touch notebooks will boost its sales this year after it saw record sales of NT$7.23 billion (US$241.59 million) last year.

Elan’s sales last year rose 39 percent from 2011, while net profit also jumped by 147 percent year-on-year to a record-high NT$1.17 billion, or earnings per share of NT$3, the company said in a March 19 filing.

Deutsche Bank AG said in a recent report that Elan’s touch IC business would grow to account for 34 percent of its total sales in the second quarter this year, compared with 32.5 percent in the first quarter and 29.1 percent in the last quarter of last year.

“We expect this ratio to increase further through 2013,” Deutsche Bank analyst Jessica Chang (張幸宜) said in the report on March 21. “We forecast Elan will increase its touch control IC sales weight to 38 percent in 2013 and 46 percent in 2014, up from 17 percent in 2012.”

Chang also said she expected Elan’s sales momentum to grow continuously into the second quarter on the back of Windows 8 notebooks and Android tablet models being released by its global top-tier customers.

Elan’s sales were forecast to crease by 20 percent this quarter to NT$2.19 billion from an estimated NT$1.82 billion in the previous quarter, with gross margin staying flat at 47 percent, Deutsche Bank said.

Total annual sales will expand 25 percent to NT$9.05 billion this year, with net profit surging by 60 percent to NT$1.88 billion, or NT$4.5 per share, it forecast.