| Prime News | | ![]() | ![]() | Cabinet Cuts Inheritance-Tax Ceiling to 40%
Taipei, Aug. 23, 2007 (CENS)--The Executive Yuan (the Cabinet) approved draft revision of inheritance and gift taxes yesterday (Aug. 22), slashing the maximum marginal rate for the taxes to 40%, from 50% now, and raising inheritance tax-exemption amount to NT$10 million, from NT$7.79 million, to be effective early 2008 at the earliest.
The draft also calls for consolidation of inheritance and gift tax by 2010, with the highest marginal tax to be halved further to 20% then.
The draft will be submitted to the Legislative Yuan for ratification soon, where it is facing an uncertain fate, though, especially in view of upcoming legislative election early next year. Many legislators have vowed to slash the highest marginal tax to 10% or even 5% in one swoop.
The Ministry of Finance (MOF), which formulated the draft, estimates that lowering of the highest marginal rate for inheritance and gift tax to 40% will cost the government tax revenue of NT$11 billion annually, decreasing tax income of municipal governments by NT$6-7 billion, as they are entitled to 80% of the revenue.
Ho Chih-chin, finance minister, noted that the government decides to wait until 2010 for slashing the marginal tax rate to 20%, following expiration of the Statute for Industrial Upgrading and tax levy on local people's overseas income, so as to alleviate impact on the government's overall tax revenue.
Many persons, though, remarked that lowering of inheritance tax's highest marginal rate to 40% will produce little effect in rectifying the extensive evasion of inheritance tax among local rich persons, especially in view of low inheritance tax rates in neighboring countries, such as Singapore and Hong Kong. Lai Cheng-yi, chairman of Shining Group, a major construction firm, dubbed the tax "sudden-death tax," only capable of being levied on persons who die suddenly without making proper arrangement to evade the tax in time.
In addition to lowering of the highest marginal rate, the draft also simplifies tax brackets for inheritance and gift taxes to five, from original 10, identical with the brackets of consolidated personal-income tax. It also lifts the inheritance-tax exemption amount to NT$10 million, on top of the existing deductible amounts of NT$450,000 per child and NT$44.5 million for the spouse.
In addition, the tax exemption amount can be utilized before the death of property owners, along with the gift-tax exemption amount of NT$1.1 million annually, helping people to make proper allocation of their properties in advance.
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| | ![]() | | | Some Futures Firms Bite the Dust in Recent Market Slump
Taipei, Aug. 23, 2007 (CENS)--The recent crash of the Taiwanese stock market has exacted heavy toll on the domestic futures market, forcing over 90% of individual investors to exit the market and leading to heavy loss for futures dealers, some of which have closed shop.
First Futures, a subsidiary of First Financial Holding, for instance, has reported to the Financial Supervisory Commission (FSC) its decision to cease operation, effective September 15, for takeover by Masterlink Futures. Grand Fortune Futures will also fold, and so will another futures firm, a banking subsidiary, reportedly.
The plight of the futures firms resulted from their misjudgment of the scale and speed of the stock-price plunge, which caught them off guard, inflicting heavy loss on them as seller of stock options.
The recent slump of the Taiex index has dealt a fatal blow to many futures firms, as many of them had already been in bad financial shape before the onslaught. As of the end of June, one third of the dealership arms of local financial institutions had seen their book value drop below NT$10 per share, with those of the futures dealership arms of Fubon Securities and Capital Securities even less than NT$7. Many professional dealers had also seen their book value plunge under NT$10 per share by the end of June, including Hsinchu Futures, Grand Fortune Futures, Merrill Lynch Asian Futures, and First Futures.
Grand Cathay Securities Futures, a subsidiary of China Development Financial Holding was reported to have incurred loss of NT$800 million in its trading in August. China Development admitted the existence of loss for the futures subsidiary but denied the scale of the red ink, citing gains in follow-up operations.
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| | ![]() | | | Hiwin Technologies to Be Listed on TSE
Taipei, Aug. 23, 2007 (CENS)--Hiwin Technologies Corp., Taiwan's largest manufacturer of mechanical components, will be listed on the Taiwan Stock Exchange (TSE), becoming the island's first mechanical-component firm to go public on the island, according to the Industrial Development Bureau (IDB) under the Ministry of Economic Affairs.
At present, Hiwin is traded on the Emerging Stock Market as an over-the-counter stock. It is expected that the company will be listed on the TSE sometime in the second quarter of next year.
IDB said in 2008 it would launch a plan to enhance the international competitiveness of domestically made mechanical components to promote Taiwan as one of the world's top-three supplying nation for mechanical components.
To that end, the IDB will unite the resources of industrial, academic, and research and development sectors with a total investment of NT$630 million (US$19.14 million at US$1:NT$32.9) in the four years to come.
The plan will benefit about 10 flagship firms of mechanical components each with annual production value of over NT$10 billion (US$303.95 million).
The IDB said most of the 1,000-some domestic firms of mechanical components have fair profitability with gross profit margin standing at between 25% and 30%. One of them even saw the profit margin reach over 70% with after-tax earnings exceeding NT$10 (US$0.3) per share. But most of these firms have little willingness to float their shares on the domestic bourse because they are tightly controlled by family members.
Over the past few years, the IDB has been encouraging domestic manufacturers of mechanical components to go public on domestic bourse so that they can raise fresh funds and attract talented workers.
A leading producer of linear guideways and ball screws, Hiwin is ambitiously expanding production capacity by procuring land spaces in the Taichung Precision Machinery Industrial Park (453,600 square feet), Yunlin Technology Industrial Park (936,000 square feet), and Tapumei Precision Machinery Industrial Park (1.62 million square feet) to build new factories which will begin mass production from this year till the end of 2009 one by one.
Hiwin noted that it registered NT$4 (US$0.12) in after-tax earnings per share on overall sales of NT$3.7 billion (US$112.46 million) last year. By scoring NT$2.1 billion (US$63.82 million) in sales in the first half of this year, the company targets to post NT$5 billion (US$151.97 million) in sales this year.
Hiwin is looking forward to see annual sales exceed the NT$10 billion (US$303.95 million) mark to challenge NT$10 (US$0.3) in after-tax EPS next year.
In addition to Hiwin, the IDB is also encouraging the listing of Tung Pei Industrial Co., an affiliate of the Teco Electric & Machinery Co. Focusign on the production such key machinery component as bearings, Tung Pei posted approximately NT$10 (US$0.3) in after-tax EPS last year.
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| | ![]() | | | Inventec Appliances to Tap Mainland China Market With Dual-mode Cellphones
Taipei, Aug. 23, 2007 (CENS)--Looking to the promising development of mainland China marketplace, Inventec Appliances Corp., one of Taiwan's leading manufacturers of own-brand cellphones, is stepping up the pace of deploying in that lucrative market in anticipation of acquiring orders from the mainland's provincial-level telecom firms.
C.S. Chang, chairman of Inventec Appliances, said his company has provided TD-SCDMA (time-division synchronous code division multiple access) and GSM (global system for mobile communication) dual-mode cellphones to mainland's China Mobile Telecom Corp. for testing. In addition, the company has obtained approval from mainland's China Unicom Corp. for the procurement of its CDMA and GSM dual-mode cellphones.
Inventec Appliances said it has recently introduced new model of CDMA and GSM dual-mode cellphone handset dubbed C112 with suggested price of NT$9,900 (US$300.91 million at US$1:NT$32.9) each. The company has resolved to commission Aurora Communications to market the new model of dual-mode cellphones domestically. With subscribers from Asia-Pacific Mobile Communications Corp., buyers of the new-model dual-mode cellphone sets will enjoy favorable prices.
Inventec Appliances said it would get an upper hand in the dual-mode cellphone market because most of the world's big names in this field haven't yet introduced dual-mode cellphones.
Samsung Group of South Korea has introduced CDMA and GSM dual-mode cellphones in the mainland with a price tag of over 7,000 renminbi. But Inventec Appliances will concentrate on the product with a price tag of approximately 2,000 renminbi.
Chang said his company intends to engage in the production of dual-mode and triple-mode cellphones as long as the market has room for such items. Inventec Appliances said it has to tap the niche market because it has smaller corporate scale and price competitiveness than that of the world's big names.
A few years ago in its heyday, Inventec was once known as one of the top-three domestic brands in sales of cellphones with the "OKWAP" brand. At that time, the company established eight direct-sale and customer service centers islandwide.
Due to its poor performance, the company has been squeezed out of the top-30 cellphone brands in terms of sales in domestic market.
At present, Inventec Appliances generates the majority of its sales from the contract manufacture of "iPod" cellphones of the U.S.-based Apple Computer Inc. Own-brand cellphones currently account for less than 20% of its total sales.
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| | ![]() | | | Qualcomm Mulls Opening Mobile TV Broadcasting Venture in Taiwan
Taipei, Aug. 23, 2007 (CENS)--Handset-chip vendor Qualcomm Inc. plans to open a mobile TV broadcasting venture in Taiwan in cooperation with local companies, according to a Qualcomm executive.
Jeffery N. Brown, head of Qualcomm's global strategy and development, MediaFLO division, announced the plan recently in Taiwan.
Taiwanese industry watchers pointed to China Network Systems Co, Vibo Telecom Inc, Asia Pacific Telecom Co and Taiwan Television Enterprise as Qualcomm's likely partners in this case.
Early this year, Qualcomm won a license to deliver TV programs on mobile devices on a test basis in Taiwan and the four companies are working with it on the delivery. However, the four Taiwanese companies stressed that the alliance deal will not become clear until next year, when the government issues commercial licenses.
Qualcomm's first mobile TV venture case came out late last year, when it entered into alliance with KDDI of Japan to open MediaFLO Japan Planning Inc. It also invested in SoftBank's Mobile Media Planning Corp.
Industry watchers expected Qualcomm to follow the two previous cases in its cooperation with Taiwanese companies, offering its technology as its stake in the new venture.
Currently in Taiwan, Qualcomm's MediaFLO technology is being used by China TV Co., Ltd. in addition to its four partners. Other Taiwanese holders of the test-broadcasting licenses use DVB-H technology. The licenses will expire at the end of this year.
Brown estimated the global market of mobile TV broadcasting would approach US$30-40 billion over the next five years and the Asia-Pacific region alone will post the most significant growth pace. In Asia, Taiwan, Hong Kong, Malaysia and India are planning to roll out commercial delivery of mobile TVs next year.
Some market research organizations forecast global subscribers to the service to reach 250 million from pessimistic view and 500 million from optimistic view in 2010. Until now, there are only 30 million mobile-TV subscribers across the world, compared with over three billion subscribers to mobile phone service.
Currently, many mobile-phone heavyweights are developing handsets capable of receiving TV programs. Nokia has introduced some mobile TV handsets using DVB-H technology. Samsung and LG have unveiled CDMA-2000 mobile phones embedded with MediaFLO technology. Motorola will debut its first MediaFLO phone by the end of this year.
Not to be outshone by DVB-H technology, Qualcomm decided to freely license its MediaFLO technology in August last year to its over 100 contract suppliers throughout the world. Industry watchers pointed out that the free licensing will help Qualcomm grab shares in the market.
Mainland China is also aggressively developing mobile TV technology to embrace for the lucrative business opportunities inspired by the Beijing Olympic Games. Mainland Chinese companies recently formed a consortium named China Digital Multimedia Broadcasting (CDMB). Its backers include Shanghai-based ZL Telecom, Beijing-based CED Wireless and Taiwan-headquartered VIA Technologies Inc. The consortium will invest US$1 billion to develop standard for the industry.
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| | ![]() | | | Hon Hai, HP to Set Up Joint-Venture Plants in Russia
Taipei, Aug. 23, 2007 (CENS)--Hon Hai Precision Industry Co., Ltd. and Hewlett-Packard Co. (HP) will jointly invest US$50 million to open factories in Saint Petersburg of Russia to assemble HP's personal computers and liquid-crystal display (LCD) monitors for the emerging market.
The factories will cover a land area of 12-15-hectares and are scheduled to begin volume productions after 12 months from now. Total area of factory buildings is estimated at 60,000 square meters.
Hon Hai's spokesman, C.A. Ding, recently confirmed media reports on the investment plan. Hon Hai is currently the world's biggest contract electronics manufacturer with revenues for this year projected at NT$1.2 trillion (US$36 billion at US$1:NT$33). HP has dethroned Dell as the world's No.1 PC maker for four consecutive quarters.
Taiwanese industry watchers pointed out the investment plan suggests the two IT giants are elevating their relationship to long-term strategic partnership from the seller-buyer tie. Closer relationship has fueled speculations that HP's ties with other Taiwanese contract suppliers would loosen.
Industry watcher analyzed that the Russia investment shows the thriving BRIC economies—Brazil, Russia, India and China—are catching attention of the world's IT manufacturers. The four economies had average growth of 8.3% last year and are now the world's most promising PC market.
So far, Hon Hai has opened or will open facilities in emerging economies including mainland China, Mexico, India, Vietnam, and Eastern Europe. In mainland China alone, it has over 18 manufacturing locations with over 300,000 workers.
For big-name suppliers like HP, increasing outsourcing orders to pure manufacturers has become their cost-efficiency strategy now. For instance, Compaq sold its factory in Czech Republic to Hon Hai in 2002 and HP sold many of its European factories to Hon Hai. Two years ago, HP rented its factories in India and Australia to the world's No.1 contract electronics manufacturer.
HP plans to buy NT$800 billion (US$24 billion) of products from its Taiwanese contract suppliers by the end of this year. HP projects to ship over 25 million desktop computers throughout this year, implying a business opportunity of NT$500 billion (US$15 billion) to Taiwanese contract suppliers this year.
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| | ![]() | | | Digital Photo Frame Makers Face Key-part Supply Shortage
Taipei, Aug. 23, 2007 (CENS)--The supply of small- and medium-size LCD panels to local digital photo frame makers is facing about a 20% shortfall, which is expected to affect the successful achieving of frame makers' shipment goals this year.
An increasing number of players have jumped into the digital photo frame sector this year as such product has become a rising star in 3C (computer, communication, and consumer electronics) market, creating rapidly increasing demands for small- and medium-size panels. As panel suppliers' capacity-expansion cannot keep up to demand increases, digital photo frame makers are expected to suffer supply shortage of such key parts in the third quarter.
Lead Data Inc., a major digital photo frame maker in Taiwan, recently said that the increasingly wide application market for small- and medium-size panels has resulted the panel supply shortage, which would not be easily eased in this year.
Lead Data said that it has begun refusing to take some orders due to concerns of foreseeable key-parts supply shortage. All of the firm's digital photo frame capacity has been booked by flooding orders.
Industry insiders pointed out that currently major digital photo frame-use panel suppliers on the island include Innolux Display Corp. and Chunghwa Picture Tubes, Ltd. (CPT), while other thin film transistor-liquid crystal display (TFT-LCD) panel makers, such the No. 1 AU Optronics Corp., are actively expanding their small- and medium-size panel capacities, but which are expected to join to ease the supply shortage next year.
There were only few companies producing digital photo frame products last year, including Action Electronics Co., Ltd., Lead Data, Abocom Systems Inc. etc., but the number of players has rapidly grown this year and has led to extremely competitive business for all participants.
From this year, Lead Data said, a big group of Taiwan companies have announced to jump into the digital photo frame business while many mainland China-based firms have also begun pushing common-mold products (most products are produced with the same or similar molds for cost cutting).
Many original players in the business worry that the increasingly crowded market will soon lead to price chaos.
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| | ![]() | | | Inventec Appliances Passes First-cycle TD-SCDMA Tests in Mainland China
Taipei, Aug. 23, 2007 (CENS)--A total of 18 companies recently passed the first-cycle terminal certification by the TD-SCDMA (Time Division-Synchronous Code Division Multiple Access) telecommunication standard in mainland China, including the China Mobile and Taiwan-based Inventec Appliances Corp. (IAC), according to Chinese-language economic daily newspaper Economic Daily News (EDN).
China originally planned to push the TD-SCDMA mobile telecom system in the fourth quarter of this year and recently decided to delay the date to the first quarter of 2008.
The Chinese central government has been actively cultivating the TD-SCDMA, a third-genertaion (3G) mobile telecommunications standard being pursued in China by the Chinese Academy of Telecommunications Technology (CATT), Datang, and Siemens AG in an attempt not to be "dependent on Western technology".
TD-SCDMA is based on spread spectrum technology which makes it unlikely that it will be able to escape completely the payment of license fees to western patent holders. The launch of an operational system was initially projected by 2005 but is now projected by 2008. Chinese central government originally planned to producre the first batch of TD-SCDMA handsets in the fourth quarter, but the project reportedly would be delayed.
Quoting Chinese media's reports, EDN said that China Mobile completed its TD-SCDMA terminal tests between June and July with another 17 counterparts such as local players Hisense, Datang, Holley, ZTE etc. and foreign firms including Motorola, Utstarcom, Samsung, LG, and IAC (Taiwan).
China Mobile has started its second-cycle TD-SCDMA tests and is expected to complete them in October, but the company has not announced any handset procurment plan. Some TD-SCDMA cellphone makers pointed out that China Mobile's related TD-SCDMA tests are under planned schedules and they predicted that the big telecom carrier's network construction and business-launch date would not change.
Some research results said that China might delay its TD-SCDMA launch date because of insufficient handset volume. The research report pointed out that China Mobile reuqires handset models to be simultaneously compatible with TD-SCDMA and GSM roaming; support High Speed Downlink Packet Access (HSDPA), enhanced data rates for GSM evolution (EDGE) dual-mode standards; and meet the low power-consumption design. Handset products that meet all the requirements are expected to be pushed as soon as possible in early 2008.
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| | ![]() | | | Size of Projected National FHC Equal Cathay Plus Chinatrust
Taipei, Aug. 23, 2007 (CENS)--The Cabinet recently announced that the government is going to set up a national financial holding company (FHC) by the end of this year, with such FHC to be composed of the three state-run banks—Bank of Taiwan, Land Bank of Taiwan, and Export-Import Bank of the ROC.
The Cabinet-level Financial Supervisory Commission (FSC) disclosed that the government would fully own the projected national FHC, which is estimated to have total assets of about US$158.8 billion or more than NT$5 trillion, equal to the combined assets of Cathay Financial Holding Co. and Chinatrust Financial Holding Co., the two leading FHCs in Taiwan.
Among Taiwan's existing 14 FHCs, Cathay leads with assets of NT$3.6 trillion (US$109.09 billion at US$1 = NT$33) at the end of June of this year. Taishin and Mega Financial Holding Co. followed with NT$2.31 trillion (US$70 billion) and NT$2.21 trillion (US$66.97 billion), respectively. Those with assets of between NT$2 trillion (US$60.6 billion) and NT$1 trillion (US$30.3 billion) included Fubon Financial Holding Co., First Financial Holding Co., Hua Nan Financial Holding Co., Chintrust, Shin Kong Financial Holding Co., and SinoPac Financial Holding Co.
In the first six months of the year, Cathay scored after-tax profits of NT$20.614 billion (US$624.67 million), the highest among the 14 FHCs and far ahead of its followers. Shin Kong took the second place with after-tax profits of NT$9.175 billion (US$278.03 million).
In the same period, Taishin, E. Sun Financial Holding Co. and Jih Sun Financial Holding Co. posted a high level of more than 30% in net debt ratio. As for dual leverage ratio (DLR), the 14 FHCs all stood at bellow the ceiling of 125% set by FHC.
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| | ![]() | | | Deutsche Bank Taipei Has Highest NPL Ratio of 22.64% Among Foreign Banks in Taiwan
Taipei, Aug. 23, 2007 (CENS)--With loans of NT$2.2 billion (US$66.67 million at US$1 = NT$33) in default by Asia Pacific Broadband Telecom Co., an affiliate of the scandal-ridden Eastern Group, Deutsche Bank Taipei Branch saw its non-performing loan (NPL) ratio recently shoot up to 22.64%, the highest among foreign banks here.
The Bureau of Monetary Affairs (BMA) under the Cabinet-level Financial Supervisory Commission (FSC) has therefore imposed limitation on the bank's hedging position for selling and buying derivative financial products here.
Compared to the generally poor performing domestic banks, Deutsche Bank's NPL ratio was only lower than 39.75% posted by Enterprise Bank of Hualien and 29.76% by Taitung Business Bank while higher than 19.56% of The Chinese Bank and 13.95% of Bowa Bank. The former two are two medium-sized local banks in Taiwan and the latter two have recently been taken over due to bad performance.
Actually Deutsch Bank's total outstanding loans as of today were merely NT$8.843 billion (US$267.97 million at US$1 = NT$33). Recently the bank appropriated NT$2 billion (US$60.6 million) as provision against the NPLs caused by Asia Pacific, as a result, its NPL ratio sharply rose to 22.64%.
Currently foreign banks in Taiwan have total outstanding loans of NT$593.3 billion (US$17.98 billion) with NPLs of only NT$5.9 billion (US$178.79 million) for NPL ratio of 1%, much lower than the corresponding 2.32% recorded by domestic banks.
Foreign banks with relatively higher NPL ratios include Bangkok Bank with 3.87%, and American Express Bank 3.52%. Deutsch Bank's NPL ratio of more than 20% is much too high and its NPL coverage ratio of 9% is far lower than the corresponding percentage of 169% posted by all foreign banks here.
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| | ![]() | | | Walsin Monthly Production of MLCC Exceeds 18 Billion Units
Taipei, August 23, 2007 (CENS)-- Walsin Technology Corporation, Taiwan's top-two maker of passive components, claimed that its production capacity of multi-layer ceramic capacitors (MLCCs) has exceeded 18 million units a month, leading the industry on the island, according to the company.
As a result, Walsin has outstripped Yageo Corporation, which boasts production capacity of 14.5 billion MLCCs, to become the largest supplier of this kind in Taiwan.
However, compared to Yageo, who has decided to raise prices of its overall product lines of chip resistors by 5-10% in light of surging prices of ruthenium, raw material for chip resistors, Walsin is inclined to negotiate with about 400 clients for possibilities of selling chip resistors coupled with MLCCs and other products bearing high gross profits, instead of raising prices on the products.
Peter Chu, president of Walsin, noted that Passive System Alliance (PSA), a Walsin-led strategic alliance between numerous companies of passive components, has achieved production capacity of 24 billion chip resistors a month, including 13 billion units from Walsin, five billion units from Taiwan's Prosperity Dielectronics Co., Ltd. and six billion from Japan's Kamaya Inc., which edge closer to Yageo's 30 billion units.
With the three aforementioned companies to expand production capacity of chip resistors next year, the PSA is expected to see the production capacity grow by at least 25% to 30 billion units a month.
Walsin scored pretax profits of NT$905 million and net profits of NT$780 million, or NT$1.33 per share, for the first half of this year, up 36.1% and 19.3% from a year earlier.
Affected by a rocketing prices of ruthenium, Walsin posted a gross profit rate of 23.1% for the first half of the year, declining 24.6% from a year earlier and 22.4% from the first quarter of the year, and 22.4% for the second quarter. But, owing to its chip resistors commanding a smaller proportion in shipment than MLCCs, Walsin could prevent a severe decline in its gross profits.
On the other hand, in response to a booming season, Yageo projected its production volume of chip resistors to gradually reach 34.5 billion units a month in the third quarter of this year, and will boost that by 10% to 38 billion units per month next year.
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| | ![]() | | | SHARP Certifies Yenyo's Junction Boxes
Taipei, August 23, 2007 (CENS)--After venturing into the solar cell-making industry, Taiwan-based Yenyo Electronics Co., Ltd., a supplier of diodes and related products, is now a SHARP-certified maker of junction boxes, according to company sources.
SHARP, the world's largest supplier of solar cells, has achieved production capacity of 820 million watts of solar cells this year, and hence has increased need for junction boxes: about four million units worth NT$2 billion. Therefore, the leading company that doesn't turn out junction boxes in-house is expected to fuel Yenyo's growth this year.
Recently, SHARP has been aggressive to place orders with Yenyo for a huge amount of junction boxes, which bear a gross profit rate of more than 30%. And this will benefit not only Yenyo, but also its parent company, namely Thinking Electronics Industrial Co., Ltd., the largest supplier of thermal resistors on the island.
Noteworthy is that Thinking Electronics specializes in manufacturing thermal resistors for mobile phones and PCs, with its core business operations rapidly growing month by month this year in the third quarter. The company is estimated to challenge net earnings of NT$5 per share for entire this year, which once drew attention from Hong Hai Group as a target for acquisition.
Thinking Electronics has already confirmed that Yenyo is in fact delivering junction boxes for solar cells to a Japanese client right now, but refused to identify such customer. The company emphasized that Yenyo, which started by producing diodes for electrical generators, has actively carved out market niches through diversifying its production, with a plan to increase production of junction boxes in the future.
Insider in the solar cell sector noted that a junction box, generally priced at NT$500 per unit, can accommodate a 200-watt solar cell to convert solar energy into electrical energy. Thus, based on world's total production capacity of 4.8-gigawatt solar cells this year, market demand for junction boxes is expected to amount to 24 million units, worth more than NT$10 billion. With the global market for solar cells growing, the figure will keep moving up.
Thus, it is encouraging for Yenyo, which has spent three years deploying its operations in the field, to see its junction boxes become certified by SHARP, which not only confirms Yenyo's manufacturing skills, but also helps Yenyo to explore more business opportunities in the market.
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| | ![]() | | | Intel Orders Energize Taiwan's Flip-chip Substrate Suppliers
Huge orders from Intel are expected to give a strong boost to Taiwan's flip-chip substrate manufacturers in the fourth quarter of this year. Intel, the world's biggest supplier of central processing units (CPUs), is struggling to fill a flood of demand for its products.
Following price cuts of 50% on its Core 2 Quad Q6000 CPUs and other reductions on Conroe and Kentsfild CPUs, Intel has experienced heated demand for those products. In addition, demand is expected to soar in the mid-August back-to-school season and the upcoming shopping season that will begin in October. To fill that demand, Intel is feverishly outsourcing the production of huge amounts of the flip-chip substrates it needs for its CPUs and chipsets.
Some independent chipset makers, such as the NVIDIA Corp., VIA Technology Inc., and Silicon Integrated Systems Corp., are following Intel's lead in placing increased orders for the substrates.
Intel currently sources its substrates from the Ibiden Co., Sinko Electronic Industries Co., and NGK Spark Plug Co. of Japan, as well as the Nan Ya PCB Corp. of Taiwan. With the explosive growth in orders, however, the production lines of these manufacturers are fully booked and the supply of substrates has become tight.
At the present time Intel takes about 60% of the total global supply of flip-chip substrates. Makers of chipsets supply about 25-30% of this amount, with suppliers of systems-on-a-chip accounting for the rest.
The other leading CPU supplier, Advanced Micro Devices Inc. (AMD), does not affect the market for flip-chip substrates very much because it uses mainly ceramic substrates.
The tight-supply situation is likely to get worse, as Intel plans to launch mass production using its new 45-nanometer process in the second half of this year and to introduce 15 new CPU models in the fourth quarter.
Another supply-and-demand factor is Intel's planned switch of specification for its flip-chip substrates from X64 to X66, requiring additional layers of processing and 30-40% more production capacity.
Taiwan's Nan Ya PCB Corp. will obviously benefit from these developments. The company has already boosted the utilization rate of its production lines to 100%, and is poised to report record revenues in August. In fact, Nan Ya has been forced to pass some orders for chipsets, graphic cards, and system-on-a-chip applications to other Taiwanese makers of substrates, such as the Phoenix Precision Technology Corp. and Kinsus Interconnect Technology Corp.
Thanks to the soaring orders from Intel, Nan Ya's revenues are expected to hit a new high of NT$10 billion in the third quarter of this year. Institutional investors believe that its gross profit margin will surge to 28-29%, up from 20% in the second quarter. (SC, August 2007)
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