The announcement on Thursday by E Ink Holdings Inc (元太科技), the world’s biggest e-paper display supplier, that it was terminating a two-year partnership with South Korean rival LG Display Co is expected to have “limited impact” on the Taiwanese company, Citigroup said yesterday.
Instead, E Ink’s growing alliance with two Taiwanese LCD panel makers — Chimei Innolux Corp (奇美電子) and Chunghwa Picture Tubes Ltd (中華映管) — would help strengthen its capacity and cost structure, Citigroup Global Markets analyst Arthur Lai (賴昱璋) said in a note.
In December 2009, E Ink, then known as Prime View International Co, and LG signed an agreement to jointly boost the fledgling e-paper display business along with cross-licensing patents.
However, the Taiwanese company felt it did not benefit enough from the partnership, with the exception of a one-time payment from the South Korean firm in exchange for US$12.2 million of corporate bonds and US$18.3 million of convertible bonds issued by E Ink’s South Korean subsidiary, Hydis Technologies Co.
Moreover, rivalry, rather than cooperation, between E Ink and LG Display has been increasing as the latter has become Apple Inc’s major supplier and is now E Ink’s main competitor in securing orders from Amazon for its Kindle Fire tablet computer, Lai said.
“As long as E Ink owns Hydis and e-paper’s patents, it is able to generate stable revenue and earnings growth,” said Lai in the note.
He maintained a “buy” rating on E Ink stock with a target price of NT$90, compared with yesterday’s closing price of NT$47.4.
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