HannStar Display Corp (瀚宇彩晶), Taiwan's fourth largest manufacturer of flat-panel displays, will team up with Japanese rival Hitachi Displays Ltd to share technology, the company announced yesterday.
In a company statement to the Taiwan Stock exchange yesterday evening, HannStar confirmed that it will "license high-end flat-panel technology for notebook computers and liquid crystal display (LCD) televisions" from Hitachi Displays starting immediately. Mass production of the new products will start in the middle of 2003, the statement said.
"This will be good for HannStar as it will allow them to move into new technology," said Frank Su (蘇穀祥), an analyst of the flat-panel-display market at BNP Paribas Taiwan.
Su suggested that the relationship is a win-win one for both parties. The Japanese need someone to manufacture TV panels and the pair will share technology and capacity, he said.
Another analyst called it a straight-forward licensing deal.
"There has been speculation that Hitachi will buy HannStar ? but it is more likely that HannStar will buy technology from the Japanese," said Debbie Wu (吳岱玲), flat-panel-display analyst at Yuanta Core Pacific Securities Co (元大京華證券).
Currently, HannStar is manufacturing LCD panels using third generation (or 3G) technology. In 3G technology, four panels measuring 15 inches diagonally can be cut from a 30-inch sheet of glass, called a motherglass.
The move to "5G technology" will mean larger sheets of motherglass, and therefore more panels per glass, thus reducing waste. Manufacturers will also be able to cut larger, more profitable panels measuring 17 and 19 inches diagonally. To make the most of any partnership, HannStar will have to build a new fab to accommodate the new technology. "They will definitely need a new fab. [While] they can produce the larger panels now in their 3G fab, it won't be cost-effective. HannStar needs to move to 5G to remain cost-effective," Wu said.
Moving up the technology ladder may prove to be important for the firm's survival.
"The move to a new technology partner shows that HannStar is incapable of going beyond its present technology level," said Tim Chen (陳建光), an analyst with InsightPacific in Taipei. HannStar had previously obtained technology from Toshiba Inc.
Chen does not think HannStar can start production as early as the middle of next year -- as the company's statement suggests. He pointed out that HannStar's local rivals have begun to upgrade to new 5G equipment that is expected to go online by summer next year. HannStar lags far behind and won't be able to start 5G production until the beginning of 2004 at the earliest, he said.
The financial benefits will not be felt for some time either. "The impact on their bottom line will be very limited for the next twelve months," Su said.
Taiwan's LCD panel manufacturers compete with the industry's leading companies, Korea's Samsung Electronics Co and LG.Philips LCD. These two companies will start mass-producing 5G LCD panels early next year.
The Japanese, who lead the industry in technology, are increasingly turning to Taiwanese manu-facturers to outsource production of their LCD panels. "Currently no Japanese LCD manufacturers plan to move to 5G. This partnership would be good for the Japanese to optimize their strength in LCD manufacturing," Su said.
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