Shares of Chunghwa Picture Tubes Ltd (中華映管), the nation's third-largest manufacturer of liquid-crystal-display (LCD) panels, as well as its parent company Tatung Co (大同), dropped yesterday as the news that it would invest in a computer monitor manufacturer failed to excite the market.
Chunghwa Picture shares closed down 0.5 percent to NT$8.36 (US$0.25) on the Taiwan Stock Exchange yesterday, while Tatung shares were down 2.8 percent to NT$13.80.
Tatung announced on Thursday that it would invest US$20 million via a subsidiary to acquire a 20 percent stake in Hong Kong-listed Proview International Holdings Ltd (唯冠), one of the world's top-five computer monitor manufacturers.
The investment will make Tatung Proview's second-largest shareholder.
The purchase would help both Tatung and Proview cut operational costs through resource integration and joint purchasing of components, Tatung said.
Proview would give some of its orders for LCD TVs and LCD monitors to Tatung's plants in China, Mexico, the Czech Republic and the Netherlands, it said.
Founded in 1918 as a factory making electric rice cookers, Tatung has expanded into a business group making home appliances, machinery, plastics, as well as digital and audio products.
Industry watchers said the deal could mean Tatung is aiming to set up a comprehensive supply chain.
"The add-on of Proview is a plus to Chunghwa Picture, as Proview's huge demand for panels will help ease the latter's inventory glut," said an analyst with IBT Securities Co (台灣工銀證券), who requested anonymity.
This would give an upper hand to Chunghwa Picture in the second quarter, when business is expected to pick up, he said.
Chunghwa Picture posted a loss in the first quarter -- the fifth-straight quarterly loss -- because of an oversupply of LCD panels which dragged prices down.
It said on Monday that sales last month were up 7.7 percent from a year ago to NT$10.86 billion, while sales for the first four months rose 2 percent to NT$40.67 billion.
There has been widespread speculation in the industry that Chunghwa Picture could be targeted by rivals such as Innolux Display Inc (
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