Quanta spinning off LCD unit to fund expansion program

Quanta Computer Inc (廣達電腦), taking advantage of a 21 percent gain in its stock this year, plans to sell shares in a flat-panel computer monitor venture next year to fund a four-year, US$4.7 billion expansion program.

The multiparty venture, Quanta Display Inc (廣輝電子), part-owned by Sharp Corp, is building new plants because "falling prices will prompt more desktop PC and TV makers to use [more] flat panels," said Tim Li (李杜榮), chief financial officer at Taiwan's largest notebook computer maker. Flat-panel demand will double in two years to five million displays, he said.

Sales of sleeker flat panel computer displays doubled in Taiwan in the first half, from a year ago, after prices for benchmark 15-inch screens dropped 50 percent, encouraging consumers to replace bulkier CRT monitors. Flat screen plants were mostly unprofitable, however, because market overcrowding.

While there's overproduction now, "Quanta Display may have the right timing to capture rising demand," said Liu Juming, who helps manage NT$15 billion at Asia Pacific Securities Investment Trust Co. "Eventually flat panels will be the standard equipment for all desktop PCs." Quanta Computer shares fell 0.6 percent to NT$81.5, after rising as much as 3 percent. Liu said Quanta's ability to sell the shares may depend on conditions on Taiwan's stock market.

The island's key TAIEX has fallen 16 percent this year as Taiwan's economic growth declined to its slowest pace in 26 years.

Chunghwa Telecom Co (中華電信), the island's largest phone company, has delayed its plan to sell shares to overseas investors this year after failing to raise money overseas last year.

Quanta Computer, which is now undertaking trial production of flat panels in Northern Taiwan, will another plant nearby. It has yet to work out the details of the offering. "The earlier we can finance it using the equity market, the better," said Quanta's Li.