AU Optronics Corp (友達光電), Taiwan’s No. 2 LCD panel maker, yesterday said it planned to form a US$10 million TV module assembly venture with local PC and TV maker Wistron Corp (緯創) in China to secure more orders.
The joint venture marked the latest in a slew of similar strategic partnerships formed by AU Optronics and TV manufacturers, including ventures with China’s TCL Multimedia Technology Holdings Ltd and Haier Group (海爾) announced in April.
“AU Optronics will be able to secure a stable demand for its products by forming strategic alliances with global electronics makers,” the Hsinchu-based company said in a statement.
Paul Peng (彭雙浪), a vice president at AU Optronics, said at an investor conference last month that these joint ventures would play a key role in helping the company secure orders during the industrial downturn, minimizing the negative impact.
Under the latest deal, AU Optronics will control 51 percent of the joint venture and Wistron will control the remaining 49 percent. The venture will tentatively be named Zhongshan BriVision Optronics Corp (中山友智光電).
“The new business model of allying with one of the world’s leading ODM [original design] manufacturers will hopefully help not only broaden our customer base, but also provide in-time and value-added services for customers by joining the strengths from both sides,” the company’s statement said.
Beginning early this year, AU Optronics has stepped up efforts to deepen cooperation with customers by establishing TV assembly joint ventures to cope with the industry’s trend of offering one-stop shopping — supplying LCD panels and helping customers assemble components into a TV module.
This change in AU Optronics’ business model became necessary following the creation of Chimei Innolux Corp (奇美電子) in March, as the new company became the LCD leader and was an unshakable rival with huge LCD panel capacity and strong electronics assembling capabilities. The company also has Hon Hai Precision Industry Co (鴻海精密), a major stakeholder of Chimei, to digest its capacity.
The board of AU Optronics yesterday approved the proposed US$5.1 million investment in the TV assembly venture, which will be located in China’s southeastern Guangdong Province.
The new Chinese joint venture will complete AU Optronics’ TV assembly network in China, which is expected to become the world’s largest LCD TV market next year, the company said.
Wistron, Taiwan’s No. 3 notebook computer maker on a contract basis, said the investment would boost the company’s future growth in accordance with the growing outsourcing trend among LCD TV makers.
Wistron told investors that its LCD TV shipments would reach between 5 million and 5.5 million units this year and would double to 10 million units next year.
The company yesterday posted a NT$2.95 billion (US$92 million), or NT$1.58 a share, second-quarter net profit, up 9.10 percent from the first quarter. Revenue rose 3.88 percent quarter-on-quarter to NT$148.92 billion, the company said in a press release.
Gross margin increased to 5.78 percent last quarter from 5.27 percent the previous quarter, helped by improvement in economies of scale, product lineup and operational efficiency.
These factors brought Winstron’s first-half net income to NT$5.66 billion, or NT$3.03 per share, soaring 71 percent from the same period last year.
Wistron’s board also approved the injection of an additional US$34.3 million to expand capacity for LCD TV, desktop computers and handheld devices in its Mexico subsidiary.
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