E Ink Holdings Inc (元太科技), which supplies e-paper displays for Amazon.com Inc’s and Sony Corp’s e-readers, yesterday said it has shut down two plants operated by its South Korean LCD manufacturing unit, Hydis Technologies Co Ltd, due to chronic losses.
More than 370 workers are affected by the factory closures, not 800 as claimed by the company’s labor union, E Ink spokesman Lloyd Chen (陳樂群) said by telephone.
Chen’s comments came after some labor union representatives from Hydis protested in Taipei against the Hydis board’s decision to close the factories.
The representatives asked that operations resume at the South Korean factories.
“Long-term losses from Hydis’ plants have become a heavy financial burden to E Ink,” Chen said. “Those plants are uncompetitive because of high manufacturing costs.”
Hydis runs a third-generation plant and a 3.5-generation plant in Icheon, South Korea, which are far less advanced compared with 8.5-generation and sixth-generation plants run by rivals in Taiwan and South Korea.
Hydis has lost more than US$100 million since E Ink acquired the company in June 2008, Chen said.
“We have injected payments into the company, but we still cannot stem the losses,” Chen said.
In 2013, Hydis posted a loss of 6.33 billion won (US$5.73 million at current exchange rates), or losses per share of 1,585.4 won, according to an E Ink report.
The South Korean unit had accumulated debts totaling 216.97 billion won as of 2013, the report showed.
Hydis collected royalties from licensing its high-definition fringe field switching (FFS) LCD technology to LCD panelmakers, including Japan’s Sharp Corp and Taiwan’s Innolux Corp (群創) and AU Optronics Corp (友達光電).
FFS technology is widely used in high-end smartphones, from Apple Inc’s products to Samsung Electronics Co’s Galaxy phones and tablets.
E Ink lost NT$780 million (US$24.8 million) in the first three quarters of last year after making a profit of NT$29 million in 2013.
“We have done everything we could to improve the factories’ operation, including adjusting the product mix and implementing a streamlining plan,” Chen said.
In 2013, about 500 Hydis employees participated in an early retirement program and received severance payments and additional compensation, Chen said.
E Ink also approached potential buyers to take over Hydis, but the efforts proved fruitless, Chen said.
To minimize the impact of the factory closures, E Ink offered a new early retirement program for Hydis employees, job relocation and education subsidies for children of Hydis workers, Chen said.
He called on Hydis workers to return to the negotiation table to solve any problems.
“We do not want to lay people off,” Chen said.
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