| Prime News | | ![]() | ![]() | Industry Urges Resumption of Bulk-Commodity Buffer Fund
Taipei, Nov. 9, 2007 (CENS)--In the face of the decreasing import of bulk commodities due to soaring international prices, the government should resume the import buffer fund subsidizing bulk-commodity import at present, urged Hung Yao-kun, chairman of the Taiwan Feed Association yesterday (Nov. 8).
Hung stressed that such a fund is necessary to avoid serious shortage battering the domestic market, which he said may erupt in February or March next year. He warned that shortage of bulk commodities may hit 30-40%, citing absence of domestic importers in recent opening biddings for bulk-commodity import, except state-run Taiwan Sugar Co. Judging from the two-month shipping time, he estimated that the supply-shortage problem may surface in the first quarter next year.
Hung put forward the proposal when he and several industrial representatives met with Wang Chin-pin, speaker of the Legislative Yuan, urging the Legislative Yuan to revise the law removing the 5% business tax for bulk communities, similar to the practice of the U.S. and Japan, along with the resumption of the buffer fund.
The government abolished the flour-import buffer fund many years ago, which subsidized flour import during high international prices but imposed a surcharge during low international prices, incorporating the NT$200 million balance of the fund into the import-damage relief fund under the Council of Agriculture (COA).
The Board of Foreign Trade recently asked the COA to study feasibility to appropriate a sum from the relief fund for resumption of the buffer fund. Steve Ruey-long Chen, though, noted that the proposal is still under the studying stage, adding that resumption of the buffer fund involves revision of related laws/regulations and setup of corresponding measures, in addition to fund raising.
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| | ![]() | | | TIER Forecasts 4.39% Growth for Taiwan's Economy in 2008
Taipei, Nov. 9, 2007 (CENS)--In line with expectation of global economic slowdown, the Taiwan Institute of Economic Research (TIER) predicts that Taiwan's economic growth in 2008 will reach 4.39%, lower than 2007's 4.41%, but pressure from soaring international oil and raw-material prices will be alleviated next year.
TIER forecasts that wholesale price index (WPI) growth next year will drop to 1.03%, down from this year's 5.35%, although consumer price index (CPI) growth will advance to 1.9%, higher than 2007's 1.6%, but will under the 2% mark.
Hung believed that international oil prices have peaked and may even trend downward next year, when supply will exceed demand in the international market, according to major international forecast bodies. Similar scenario will also occur for raw materials, whose demand will drop considerably next year, due to slowdown of the global economy.
TIER revised upward its forecast for Taiwan's economic growth in 2007 to 4.41%, up from original 4.21%, citing increase of private-investment growth to 4.5%, due to steady international and domestic economic expansion, as well as continuing capacity expansion among domestic manufacturers.
The institute forecasts that U.S. economic growth this year will reach 1.8-2.1%, lower than Japan and the European Union, due to impact of the subprime mortgage storm and the ensuing credit crunch.
Taiwan's exports will advance 9.38% in 2008, when imports will grow 10.33%, resulting in a trade surplus of US$25.87 billion. Exchange rate of the NT dollar will average US$1=NT$32.38 next year, according to TIER.
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| | ![]() | | | FPG Promotes Within for Three Major Subsidiaries
Taipei, Nov. 9, 2007 (CENS)--Formosa Plastics Group's three major subsidiaries, including Nan Ya Plastics Corp., Formosa Chemical & Fibre Corp. (FCFC) and Formosa Petrochemical Corp. (FPCC), recently promoted their vice presidents to presidents.
FPG's founder Y.C. Wang said his group would rely on capable professionals to run all the group's major business units.
The newly designated presidents for Nan Ya, FCFC and FPCC are Chia-chao Wu, Fu-yuan Hung and Chi-yi Su, respectively. The promotion within for the group's three major subsidiaries indicates that the group believes in the expertise of its own people, while the group's founding Wang family will still retain the power to make decisions and policies.
With years of experience working for FPG, the three newly-promoted presidents had worked their way up to the vice presidency in their respective companies.
Wu has been acting as the spokesman for Nan Ya for several years and over the past few years has been in charge of the development of electronics business. Hung has successful experience in developing polystyrene (PS) and acrylonitrile butadiene styrene (ABS); while Su is a major player in helping FPG develop its naphtha-cracking complex located in Yunlin County of central Taiwan.
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| | ![]() | | | FCFC to Expand Investments in Vietnam
Taipei, Nov. 9, 2007 (CENS)--In line with the expansion project launched by its affiliate—Formosa Taffeta Co., Formosa Chemical & Fibre Corporation (FCFC), one of Taiwan's leading manufacturers of nylon, has recently resolved to establish an integrated plant for nylon and spun yarn in Vietnam, which is expected to begin mass production in 2009 at the earliest.
If everything goes according to plan, FCFC, a subsidiary of the Formosa Plastics Group (FPG), will be the first domestic nylon manufacturer to invest overseas. The FCFC's move is expected to inspire downstream firms to follow suit.
Five years ago, FPG's Nan Ya Plastics Corporation, FCFC, Formosa Taffeta teamed up with King Car Enterprise Co. to forge a special integrated textile zone in Vietnam by establishing the Formosa Industries (Vietnam) Co. The joint-venture firm focuses on the development and production of polyester-related products.
It is estimated that FCFC will invest over NT$10 billion (US$308.64 million at US$1:NT$32.4) to produce nylon in Vietnam, including installation of production equipment and a power plant.
It is said that Y.T. Wang, co-founder of the FPG, approved the FCFC's overseas investment project in mid-October.
The expansion project launched by FCFC will proceed in four construction stages. The first construction stage will focus on the establishment of yarn-spinning equipment with two production lines with daily capacity of one million metric tons of polymer or one line with 1.3 million metric tons.
In fact, the FPG already made a fact-finding tour of mainland China aiming to find suitable production sites to produce nylon three years ago; but such plan was scrapped and the FPG resolved to go south instead. FPG said over the past few years, the mainland has gradually lost its advantage to attract foreign investors because of the rising labor wages and environment-protection costs.
On the other hand, Vietnam, after joining in the World Trade Organization, has been able to attract many foreign investors in the apparel sector. Besides, Vietnam, being an ASEAN member, is eligible for preferential tariffs when exporting products to the member nations of the ASEAN (Association of Southeast Asian Nations).
It is predicted that FPG will launch another massive investment project in Vietnam in the foreseeable future, which could be even bigger than the ethylene investment project that has been set up in the mainland.
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| | ![]() | | | ASE's Oct. Revenue Hits Record High of Over NT$10 B.
Taipei, Nov. 9, 2007 (CENS)--Chip testing and packaging player Advanced Semiconductor Engineering (ASE) Inc. saw its consolidated monthly revenue soar past the NT$10 billion (US$303 million at US$1:NT$33) milestone the first time in October to NT$10.16 billion (US$307 million), up 3.7% from September and 23% from a year earlier.
With the October revenue, the company's total consolidated revenues for the first 10 months this year topped NT$82.3 billion (US$2.4 billion), making it the world's No.1 chip assembler.
Siliconware Precision Industry Co., Ltd. reported revenue of NT$6.2 billion (US$190 million) for October, also setting a new high though only increasing 1.37% from a month earlier. In the first 10 months this year, the company had revenue of NT$53.1 billion (US$1.6 billion), growing 13.63% year-on-year.
ASE forecasted its revenue for the fourth quarter to increase at least 5% while Siliconware projected its revenue to surge only 2-3% in the meantime. Industry watchers estimated the two companies to meet such expectations.
Lingsen Precision Industries, Ltd. raked in record revenue of NT$482 million (US$14.6 million) in October, up 3.52% from the same period of last year. Some institutional investors forecasted the company's revenue for the fourth quarter to approach NT$1.5 billion (US$45 million).
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| | ![]() | | | MediaTek Saw Revenue Lose 18% in Oct. Worse Than Expected
Taipei, Nov. 9, 2007 (CENS)--MediaTek Inc., currently Taiwan's No.1 fabless house by revenue, recently announced its revenue for October dropped over 18% from a month earlier, worse than its projected 10-12% decline.
Last month, the company had consolidated revenue of NT$8.1 billion (US$247.3 million at US$1:NT$33). But the company scored total revenue of NT$67.7 billion (US$2 billion) in the first 10 months this year, soaring 50% from the same period of last year.
The company's share price once plunged 3% in Nov. 7 trading on the downbeat announcement.
However, some industry watchers reiterated "buy" ratings on MediaTek shares. They pointed out that whether the October recession is a real decline will depend on the company's revenues for December and upcoming January. They went on that if the company's revenues for the next two months are roughly the same as recorded in usual seasons, the company's lukewarm revenues in this quarter will indicate that "structural problem" does not exists.
Sunplus Technology Co., Ltd., another Taiwanese fabless house, raked in revenue of NT$674 million (US$20 million) in October, contracting over 10% from a month earlier. However, the company estimated its revenue for this month and next will very likely rebound by virtue of increased shipment of chips for TVs.
Service & Quality Technology netted revenue of NT$51 million (US$1.5 million) in October alone, dropping nearly 30% from a month earlier although surging 22.04% from the same period of last year.
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| | ![]() | | | Uni-President's EPS Hit 10-Year High of NT$2.11 in First 9 Months
Taipei, Nov. 9, 2007 (CENS)--Thanks to strong market demand in China, Uni-President Enterprise Corp., Taiwan's leading food manufacturer, saw after-tax profits exceed its projection to reach NT$7.515 billion (US$227.73 million at US$1 = NT$33) in the first three quarters of this year for a sharp annual rise of 158%, and the earnings per share (EPS) hit a 10-year high of NT$2.1 (US$0.064).
In the same period, the group's revenues came to NT$35.069 billion (US$1.063 billion), showing a modest annual rise of 8.81%. However, its overseas operations all showed pretty good performance and gained considerable profits to help boost the group's earnings.
From January to September of the year, the company's reinvestments in China scored profits of NT$1.7 billion (US$51.52 million), a whopping rise of 256% from the corresponding figure of last year and also the highest among those gained by Uni-President's overseas operations.
It's noteworthy that Uni-President's investments in Vietnam raked in profits of US$9.83 million in the first nine months, about three times that recorded a year earlier. The group is predicted to generate full-year profits of NT$8-8.5 billion (US$242.42-257.58 million) from its operations in Southeast Asia, with projected EPS of NT$2.5 (US$0.076).
In recent years China has been gung-ho to prepare for the 2008 Beijing Olympic Summer Games, which is believed to generate numerous business opportunities. Uni-President has already won the exclusive right to supply instant noodles for the upcoming Games. So, it is expected to see continuingly ballooning business in China next year.
In addition to Uni-President, other renowned Taiwanese food manufacturers that may benefit from the Beijing Olympics include Won Won Group, Great Wall Enterprise Co., and Master Kong.
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| | ![]() | | | Taiwan Holds 4th Largest Forex Reserves in October
Taipei, Nov. 9, 2007 (CENS)--Taiwan saw its foreign exchange reserves increase US$2.986 billion from a month earlier to US$265.924 billion at the end of October, remaining the world's fourth largest holder of forex reserves, according to the central bank here.
The central bank attributed the rise to the interest income from the deposits of forex reserves at banking system and the appreciation of euro, which helped boost the value of the central bank's holding of euros. Besides, the central bank bought greenbacks in the forex market several times in October trying to curb the appreciation of the New Taiwan dollar.
The statistics released by the Cabinet-level Financial Supervisory Commission (FSC) showed that the net monthly inflow of foreign capital reached US$516 million as of Oct. 26. If including the purchases of foreign currencies by the central bank, Taiwan's forex reserves should have roughly grown by US$6 billion during the month. However, domestic investors kept buying greenbacks for overseas investments, which helped cut the actual increase in forex reserves by half. This, in turn, was the main reason for the slow growth of the reserves, market observers said.
Since the beginning of the year, Taiwan has witnessed net outflow of US$224 million in forex. In contrast, South Korea's outstanding forex reserves have increased by US$20.6 billion to reach US$259.7 billion in its outstanding, which has narrowed the gap between its forex reserves and that held by Taiwan to only US$6.2 billion.
Currently India is the sixth leading holder of forex at US$253.3 billion as of Oct. 19. If Taiwan keeps seeing net outflow of forex, South Korea and India might outpace Taiwan as early as the end of 2008, market observers forecasted.
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| | ![]() | | | Int'l Brands to Heavily Outsource LCD TVs From Taiwanese Suppliers in 2008
Taipei, Nov. 9, 2007 (CENS)--Contract suppliers in Taiwan will benefit from the fact that international brands of liquid crystal display (LCD) TVs are expected to raise their outsourced production to 35% in 2008, according to industry sources.
Among Taiwanese contract suppliers in the sector, Qisda Corporation has newly added Philips and Samsun to its client list, LiteOn Technology Corporation has landed orders from BenQ and LG, while TPV Technology Ltd. and Compal Electronics Inc. have also garnered new orders.
DisplaySearch, a globally famous market survey institute, noted that world's major LCD TV brands will sharply boost their outsourced production to 35% in 2008 from 22% this year, and will further push up the figure in 2009.
Besides, the institute added, as selling prices of LCD TVs are facing great pressure for going downward, brands will have to maintain their profits by outsourcing LCD TVs. Thus, they are expected to place orders with Taiwanese contract suppliers for not only low-end models, but also middle-end models in the future.
After wining orders from LG and Sony recently, Qisda has also snapped up orders from Philips and Samsung for LCD TVs for sales in 2008. This will help the company boost its shipment to three million units for next year from 400,000 units posted this year. Also, aided by its partner AU Optronics Corp., a leading supplier of display panels in Taiwan, Qisda is in a better position to squeeze into supply chains of international large-sized brands.
Coincidentally, LiteOn has obtained orders from BenQ and LG for LCD TVs for delivery next year, while Compal already landed orders from Acer and Toshiba. In addition to Vizio, Innolux Display Corp. will add Sony as its new client next year. Also, TPV has newly joined supply chains of some smaller brands.
DisplaySearch indicated that Taiwanese contract suppliers are mainly turning out LCD TVs on an electronics manufacturing service (EMS) or original equipment manufacturing (OEM) basis, but are still incapable of producing on original design manufacturing (ODM).
At the mean time, to supply leading international brands, Taiwanese contract suppliers must be able to operate globally, such as setting up manufacturing bases in Europe and the U.S.
In fact, operation of supply chains in the sector making TVs is quite complicated. To reap profits, contract suppliers in the sector must improve their production process and cut use of raw materials. As display panels account for more than 40% of their production costs, contract suppliers can't help but strive to save the remaining 20-25% costs for more profits, according to DisplaySearch.
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| | ![]() | | | LiteOn, Delta Saw October Revenues Hit New Highs
Taipei, Nov. 9, 2007 (CENS)--Taiwan's major makers of power supplies scored shining sales performance in October, with LiteOn Technology Corp. reporting record combined revenue of NT$18.1 billion and Delta Electronics Inc. also hitting a new high of NT$12.704 billion, according to company sources.
Due to its strong growth in sales of light-emitting diodes (LEDs) and power supplies, LiteOn saw its combined revenues for October rose 26% from a year earlier and hit a new high for the second consecutive month.
LiteOn was Taiwan's first downstream LED packaging firm to score single-month revenue of NT$1 billion in September. The figure rose further to a historical high of NT$1.05 billion in October, up 24% from a year earlier, thanks to strong demand for its surface mount devices (SMDs) from customers.
After acquiring Li Shin International Enterprise Corporation, a Taiwanese supplier of power supplies, LiteOn has seen its sales sharply grow by 60% to hit new highs for four consecutive months in the second half of this year, with sales of models for liquid crystal display (LCD) TVs gaining the momentum.
As LED and power supplies are expected to stay hot in the market, institutional investors projects LiteOn's sales revenue for the fourth quarter to surge 10% from the third quarter, and soar significantly from a year earlier.
On another front, Delta reported sales revenue of NT$12.704 billion for October, a record monthly high and up 27% from NT$10.002 billion posted a year earlier. The firm has scored aggregate revenue of NT$107.578 billion over the first 10 months of this year.
With the strong market for LCD TVs fueling demand for power supplies recently, Delta has hence enjoyed robust sales growth.
Yancey Hai, CEO of the firm, said that at present Delta commands about 10% of the global market for power supplies for LCD TVs. Based on an annual global sales estimate of 90 million LCD TVs, Dleta projects its shares most likely to reach 15% by the end of this year. The firm already starts delivery of models for large-sized TVs, which are expected to become mainstream products next year.
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| | ![]() | | | Chimei Targets 450,000 LCD TVs in 2008
With increasing sales in the United States and mainland China, Taiwan's Chi Mei Group expects to ship 450,000 LCD TVs in 2008, up 50% from this year.
Ben Cheng, vice president at Nexgen Mediatech Inc., an LCD TV maker under the Chi Mei banner, recently reported that the "CHIMEI" brand LCD TV had received an order for about 50,000 units from American hotel chains. In mainland China, he added, CHIMEI LCD TVs will be marketed in high-end audio/video equipment stores next year.
Sales of CHIMEI LCD monitors are expected to grow by over 50% to about 1.5 million units next year, Cheng said, and total own-brand TV and monitor sales are expected to hit a record high of NT$15 billion (US$454.5 million at NT$33.8:US$1).
According to Cheng, who is responsible for the global marketing of CHIMEI-branded TVs and monitors, Nexgen will begin small-batch shipments of mainly 32- and 42-inch TVs to American hotel chains in the fourth quarter of this year. The shipments will expand to about 50,000 units in 2008.
Before the Chinese New Year sales peak, Cheng added, CHIMEI-branded LCD TVs (mostly 42- and 52-inch high-picture-quality models) will be displayed on the racks of high-end audio/video stores around mainland China. Sales of LCD TVs there are expected to reach 9 million units this year and to make a big leap in 2008 thanks to the Beijing Olympics fever, making China the world's third-largest LCD TV market. In China, Cheng pointed out, the upper end of the LCD TV is big and filled with lucrative business opportunities.
Good Brand Image
In China, Cheng comments, CHIMEI-branded LCD TVs have already established a good quality image and Chi Mei Optoelectronics Corp. (CMO), a major supplier of thin film transistor-liquid crystal display (TFT-LCD) panels, is also well known for its high-quality TV panels. This name awareness is expected to make CHIMEI LCD TVs increasingly popular in China, where Cheng expects to sell about 50,000 units a year in the initial stage.
Taiwan and Europe have thus far been the major markets for CHIMEI-brand LCD TVs, Cheng pointed out. In the first nine months of this year Nexgen sold a total of about 70,000 LCD TVs on the island, including around 10,000 units in September, and sales in the fourth-quarter peak season are expected to be even better. Cheng estimated that annual sales in Taiwan will outstrip 100,000 units for the year, and reported that CHIMEI aims to win at least 30% of the market for 46- to 52-inch models.
Cheng predicted that global sales of CHIMEI LCD TVs will top 350,000 units this year, including about 200,000 in Europe. The group has terminated its LCD TV contract production business so as to concentrate all of its resources on own-brand products. In Europe, CHIMEI has rapidly become a second-tier LCD TV nameplate and the largest Taiwan LCD TV brand in the market there.
In regard to the monitor business, Cheng said that wide-format models currently account for over 90% of CHIMEI's lineup and most of the company's products are 19- and 22-inch high-end models that meet the requirements of game players.
Cheng said that the sales value of CHIMEI-branded LCD TVs and monitors is expected to reach NT$15 billion (US$454.5 million) in 2008, compared with about NT$10 billion (US$303.03 million) last year and NT$6 billion (US$181.82 million) in 2005.
Niche Market
Industry experts attribute the good sales achieved by CHIMEI-branded LCD TVs and monitors over the past two years to the strategy of focusing on niche markets. The recent success in winning orders from American hotel chains and high-end audio/video equipment outlets in mainland China is expected to help CHIMEI escape fierce price-cutting competitions in the mass-marketing channels.
Chi Mei Group chairman Hsu Wen-lung has long stressed that branding is the core of an enterprise's sustainable operation. This led to the establishment of the CHIMEI brand for LCD TV and monitor products in 2006 and to the group's gradual withdrawal from contract manufacturing.
CHIMEI chose as its first battlefield Taiwan, a market filled with numerous international brands and major contract manufacturers. This allowed the brand to consolidate its image through integrated marketing, superior services, and deep-rooted sales channels, which are also the best tools to use in developing the global market.
With the strong support from CMO, an affiliated firm and the second-largest supplier of large-sized TFT-LCD panels on the island, CHIMEI took the lead in introducing, in October, the first home-grown 52-inch high-end LCD TV model. This advanced product, which carries a price tag only about half that of imported equivalents, differentiates CHIMEI from its local competitors in the upper end of the market.
Cheng says that CHIMEI will continuously introduce high-end LCD TV products in 2008, including 42- and 32-inch models using 120Hz technology to eliminate motion blur.
The vice president said that the price-cutting competition in American and mainland Chinese hyper-markets and 3C (computer, communication, and consumer electronics) retail chains is too fierce for CHIMEI, and so the brand will continue to focus on own-brand marketing in niche markets.
(QL, October 2007)
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