Flat-panel display maker Innolux Corp (群創) yesterday said it is stepping up investment on developing panel-level packaging technologies, and that it plans to allocate more than 15 percent of its capital expenditures next year to the new semiconductor business.
This investment demonstrates Innolux’s determination to diversify from a pure flat-panel display manufacturer and to escape from the industry’s boom-and-bust cycles, the Miaoli-based company said.
The chip packaging business would play a vital role in the company’s transformation efforts, it said.
Photo: Lisa Wang, Taipei Times
This year, Innolux planned to spend about 15 percent of its annual capital expenditures, about NT$20 billion (US$612 million) or a little under that amount, on semiconductor-related technologies and equipment. About 85 percent would be allocated for its core display business, it said.
“In the long term, we hope for the semiconductor and display businesses to each account for half of the company’s total expenditures,” Innolux chairman Jim Hung (洪進揚) told reporters during an annual media event in Taipei yesterday.
“We intend to raise the portion of semiconductor investment each year,” Hung said.
Innolux’s entry into the semiconductor packaging sector has caught the attention of investors and semiconductor experts, as advanced packaging technologies are seen as potential solutions to extending Moore’s Law, when scaling technology reaches its physical limits. This is a reference to Intel co-founder Gordon Moore, who observed in 1965 that the number of transistors on an integrated circuit were doubling about every two years with minimal rise in cost.
Innolux’s aim is to create a new value-added business by leveraging its flat-panel display capacity and technologies. The first step is to revitalize a less advanced 3.5-generation flat panel fab and repurpose the glass substrates for chip packaging to create better value, since the fab is not cost-competitive, the company said.
The company originally planned to start shipping the first products using its first-generation panel level package (PLP) technology, called Chip-First technology, by the end of this year, it said, adding that it was targeting mid-to-low-end chips such as power ICs, or radio-frequency ICs, which are mostly used in smartphones and other consumer electronics.
However, a slump in smartphone demand stalled the company’s plan, Hung said.
Now, the company hopes to postpone the shipment until the first half of next year, when smartphone demand picks up a bit, he said.
Despite the setback, Innolux continues investing in second and third-generation PLP technologies, with the aim of progressing to mid-range and advanced chips.
To tap into silicon photonics, a new chip packaging technology, Innolux has acquired unspecified shares of two small-scale companies, BE Epitaxy Semiconductor Technology Co Ltd (元澄半導體科技) and Best Epitaxy Manufacturing Co Ltd (先發光電), it said.
Hung said that he had reached his turn-around goal for the company during his first 6-year tenure.
Innolux reported its second profitable quarter in a row, with profits of NT$421 million last quarter. In the first three quarters of this year, it accumulated losses of NT$2.55 billion, an improvement from losses of NT$15.4 billion during the same period last year.
Local rival AUO Corp (友達) has been in the red for the last 10 quarters. Losses have improved to NT$4.68 billion during the first three quarters, compared with losses of NT$16.69 billion a year ago.
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