| Prime News | | ![]() | ![]() | CBC Raises Policy Interest Rates
Taipei, Sept. 21, 2007 (CENS)--Despite the higher-than-expected interest-rate cut by the U.S. Fed, the Central Bank of China (CBC) decided to raise the three policy interest rates by 0.125 of a percentage point yesterday (Sept. 20), in order to bolster the low real New Taiwan dollar interest rate.
The move represents the 13th rate hike by the CBC since October 2004, for an accumulated scale of 1.875 percentage points. As a result, the discount rate will climb to 3.25%, the rate on accommodations with collateral to 3.625%, and the rate on accommodations without collateral to 5.5%. Domestic banks are expected to follow suit raising NT dollar interest rate by 0.1 of a percentage point, according to industry insiders.
Perng Fai-nan, CBC governor, noted that despite the latest hike, the NT dollar interest rate still stands below the neutral-rate level, or a level representing neither tight nor loose monetary policy, a remark implying possibility for further interest-rate hike by the CBC, according to interpretation of market insiders.
Citing forecast by the Directorate General of Budget, Accounting, and Statistics (DGBAS), Perng pointed out that consumer price index growth may rise to 2.34% in the second half and 1.46% for entire 2007, due to typhoon, soaring international oil prices, and low comparison base. Based on the latter figure, the real NT dollar interest rate will drop to only 0.93%.
Perng discounted the possible effect of the interest rate hike on the housing market, referring to maximum hike of 0.78 of a percentage point for housing loans at domestic banks over the past three years, much lower than accumulated hike of 1.875 percentage points in the CBC's policy interest rates during the same period.
The interest rate hike is expected to bolster the NT dollar, alleviating the massive capital flight in recent years, which has made it one of the weakest currencies worldwide, according to market insiders.
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| | ![]() | | | MOF Studying Tax System Overhaul
Taipei, Sept. 21, 2007 (CENS)--In anticipation of the expiration of the Statute for Industrial Upgrading in 2009, the Ministry of Finance (MOF) is pondering overhaul of the taxation system, including substitution of dividend-exemption system for the existing consolidated tax system and slashing of business income tax.
The dividend-exemption system was raised by some business representatives during a meeting with officials of the MOF and the Ministry of Economic Affairs (MOEA) yesterday (Sept. 20) for discussing tax reform to be adopted in tandem with the lapse of the Statute of Industrial Upgrading. MOF officials expressed willingness to study the proposal, saying that it in fact has been included as an option in the ministry's tax-reform program.
Compared with consolidated tax system, dividend-exemption system features simpler calculation and can lower the tax burden for many shareholders, with foreign shareholders and big shareholders being major beneficiaries. Under the new system, shareholders can enjoy tax exemption for part or entirety of their dividends, while under the consolidated taxation system, they can deduct business income tax paid by companies from their personal income tax.
MOF officials, though, noted that to alleviate impact on the government's taxation income, it is more feasible to grant shareholders tax exemption on half, rather than entirety, of their dividends. Along with the expected cut on business income tax following expiration of the Statute for Industrial Upgrading, say, from 25% now to 20%, the new system will enable big shareholders to cut tax on their dividends to under 40%, unlike the current situation when they often have to bear the maximum 40% rate for personal income tax on the dividends. Moreover, under the consolidated tax system, foreign shareholders cannot enjoy any benefit, due to their inability to deduct business income tax paid by companies from their personal income tax.
During the meeting, business representatives supported the MOF's proposal of slashing business income tax in exchange of revoking tax incentives included in the Statute for Industrial Upgrading after its expiration. MOF officials noted that despite the statute, real average taxes for strategic industries and traditional industries still range 14.05% and 29.5%. Extensive cut on business income tax, instead of preferential treatments for select industries, will create a fair environment featuring comparative low tax for all industries, which will encourage domestic investments, according to MOF officials.
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| | ![]() | | | Catcher Technology to Tap Touch-on Panels Sector
Taipei, Sept. 21, 2007 (CENS)--Catcher Technology Co., one of Taiwan's leading manufacturers of aluminum-magnesium alloy, recently confirmed it would engage in the production of diverse components, including the most popular touch-on panels.
To that end, the company will speed up the pace of launching strategic alliances and merger and acquisition to enlarge sales. The company has set a goal to challenge NT$50 billion (US$1.51 billion at US$1:NT$33) in annual sales in 2010.
At a recently held interim shareholders meeting, Catcher passed a proposal to set up a R&D center of 900,000 square feet in Taiwan and issue a global depository receipt of less than 50 million shares. The company won't rule out the possibility of increasing capital by cash to raise fresh operating funds.
Catcher president Hung Shui-su said his company would have great opportunities to challenge NT$20 billion (US$606.06 million) in annual sales this year as it has stepped up shipments of products to heavyweight customers.
Hung claimed his company is actively evaluating the feasibility off entering the production of touch-on panels. If everything goes smoothly, the company would be able to begin shipping the new products in the first quarter of next year. The company's resolution to tap the touch-on panel field is triggered by the introduction of the "iPhone" cellphones from the U.S.-based Apple Computer Inc.
According to an internal industry analysis conducted by Catcher, the touch-on panels can be widely applied to the 3C (consumer electronics, communications, computers), financial and medical industries. To tap the production of the touch-on panels, the company is soliciting talented R&D personnel, hoping to have a tight grip at the sophisticated technology.
Catcher is poised as a professional manufacturer of casings. Over the past several months, Taiwan's leading computer firms, including Quanta Computer Inc., Asustek Computer Inc., and Compal Electronics Inc., have been launching vertical integration to develop casings.
The company predicted its profit margin would be kept at the 50% level this year. By investing in the new production field, the company will continue to raise the value-added of its products.
An institutional investor said the overall production value for magnesium alloy industry has reached over NT$100 billion (US$3.03 billion) at present. In the next few years, the industry is expected to grow at a double-digit pace annually.
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| | ![]() | | | Moody's Rates Chung Kuo Insurance 'A3' The First Time
Taipei, Sept. 21, 2007 (CENS)--Moody's Investors Service has assigned an A3 global scale insurance financial strength rating to Chung Kuo Insurance Co. (CKI), the non-life insurance subsidiary of Mega Financial Holdings Co. This is the first time that Moody's has assigned such rating to CKI. The rating outlook is stable.
At the same time, Moody's has assigned an Aa2.tw national scale insurance financial strength rating to CKI, also with a stable outlook. National Scale Ratings are intended for use primarily by domestic investors in those countries where Moody's National Scale Ratings exist—such as Taiwan—and serve to rank obligations in a particular country relative to each other. Specifically, a rating of Aaa.tw on Moody's Taiwan National Scale indicates an issuer or issue with the strongest domestic creditworthiness and the lowest likelihood of credit loss on local currency obligations relative to other local issuers or issues.
Moody's National Scale Ratings are not intended to be globally comparable and do not show its opinions regarding absolute default risks. In this respect, they are different to Moody's global scale ratings assigned to Taiwanese institutions—which do not carry the "tw" Suffix. These global scale ratings are directly comparable to Moody's global ratings assigned elsewhere in the world, and do address absolute default risk.
"Our A3 and Aa2.tw ratings on CKI is supported by the company's solid property and casualty insurance franchise, and a strong customer base in commercial lines in Taiwan, partially due to its previous background as a government-related entity," said Sally Yim, a Moody's analyst.
"Furthermore, it has maintained a stable market position in Taiwan over the past few years, while its premium growth has been in line with the industry average," added Yim.
In addition, CKI follows a conservative investment strategy, as reflected in its large holdings of cash and fixed deposits. Its ratio of high-risk assets (mainly equities) to invested assets was around 28% at end-2006, which is consistent with its current rating level and compares favorably with those of its peers in Taiwan.
Moody's rating also considers CKI's improved financial flexibility because of its 100% ownership by Mega FHC, one of the island's largest financial holding companies, and which shows a strong willingness to provide support in times of stress.
However, there is no additional uplift to the stand-alone rating because CKI exhibits a relative low level of integration with other group subsidiaries and the rating level of CKI and Mega FHC are identical.
Moody's expects CKI to maintain its market position and profitability at current level. In addition, the level of support from Mega FHC would continue to hold.
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| | ![]() | | | HP Executive Clears Up Reports on NB Order Cut
Taipei, Sept. 21, 2007 (CENS)--Ted Clark, senior vice president and general manager of Hewlett-Packard's mobile computing business unit, recently said his company's shipments of notebook computers have been very strong and projected his company's shipments to grow far beyond the forecast 28% year-on-year rate for global market.
Clark made the statement during his recent visit in Taiwan. He was accompanied by vice president and general manager of HP's consumer notebook business unit, Tom Michell, and vice president of HP's business notebook business unit, Dan Forlenza, during the visit.
Clark said he was not clear about why some institutional investors speculated his company would reduce orders to contract notebook-computer suppliers and presumed the reports must have mistaken desktop-contract cut for notebook-contract cut.
Some institutional investors made the speculations on predications that global market for notebook computers would slump in the fourth quarter because of the U.S. sub-prime mortgage credit crunch, which they believe will hurt notebook computer consumption.
Clark said he hasn't felt an imminent impact of the credit crisis on the market in an interview offered by the Chinese-language Economic Daily News, a sister publication of this news agency. He cited a survey done by IDC and said that global notebook-computer market will likely grow 28% throughout this year.
Clark said he has felt upbeat about global PC market especially notebook segment. He noted compound annul growth rate for global notebook computer over the past decade was 40% and said the trend would not likely slow down.
The HP executive noted that IDC just revised upward its projection for global notebook shipment to 160 million systems throughout this year.
Clark was impressed by the soaring PC demands in emerging economies and said his company had taken aggressive steps to these markets. For instance, his company already opened a design center in mainland China to develop products catering to local appetites and added sales people to its mainland Chinese outlets to tap the central and western Chinese hinterland. In Russia, the company already co-opened a desktop factory with Foxconn, which is held by Taiwanese electronic manufacturer Hon Hai Precision Industry Co., Ltd. HP has also opened factories in Brazil and India to tap local markets.
HP is currently the world's No.1 PC supplier, and its sales in Taiwan have made impressive growth so far this year. According to market-tracking organization IDC, HP Taiwan beat the downturn of Taiwan's PC market and saw its PC revenue increase 20% in the first quarter this year from a year earlier. Its notebook-computer unit registered a 50% increase year-on-year, its laser printers bagged over 50% of the domestic market, and its inkjet printers commanded around 45% of the Taiwan market.
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| | ![]() | | | Minor Taiwanese Silicon Foundries Filled Up With Orders
Taipei, Sept. 21, 2007 (CENS)--Thriving demands for Power MOSFET and analog chips have brought Taiwanese second-tier silicon foundries tremendous contracts that have filled up their production capacities and will likely keep their production lines at full capacity until November this year.
Advanced Microelectronic Products, Inc. has boosted output capacity to 35,000 wafers at its 150mm wafer fab from 30,000 wafers, inspiring expectations that the company's revenue will likely soar month after month until the end of this year.
Advanced Microelectronic's major customer is Advanced Power Electronics Corp. (APEC), which took over Power MOSET and low-dropout regulator (LDO) technology from U.S. chipmaker International Rectifier (IR).
APEC has applied the two transferred technologies to liquid-crystal display (LCD) TVs and Wimax servers. Markets of the two application products are thriving now, prompting APEC to increase foundry orders to Advanced Microelectronic.
Thanks to swarming orders, the foundry supplier raked in record revenue of NT$144 million (US$4.3 million at US$1:NT$33) in August alone. Busy orders enabled the company to begin turning into profitability from loss in the second quarter, shaking off loss for 10 consecutive quarters.
The company is planning another private placement program to raise capital for expansion. United Microelectronics Corp. (UMC) and IR are reported to subscribe for the company's shares in the program.
Mosel-Vitelic has sold out foundry capacity of 60,000 wafers at its 150mm factory to customers of analog chips and power-management chips. To cope with tight capacity, the company is planning to install a 200mm line for output of 10,000 wafers, which is expected to be completed next year. Industry watchers estimated the planned line would likely inject an additional NT$100 million (US$3 million) into its revenue a month.
Foundry production has recently contributed around 30% of the company's gross margin, inspiring upbeat outlook on the company's future earnings performance.
Besides, the company is also producing solar cells, which are estimated to inject NT$200 million (US$6 million) into the company's revenue a month. The business represented the majority of the NT$800 million (US$24 million) revenue it posted in August. The company is planning to add one more solar-cell line to double the output to 60 megawatts a year.
Episil Technologies Inc. depends on foundry business for over 60% of its revenue. The company is now running two 125mm fab offering combined capacity of 40,000 wafers and a 150mm fab offering capacity of 25,000 wafers to handle the production.
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| | ![]() | | | 700,000 Bluetooth Headsets to Be Sold in Taiwan 2007: GN Taiwan
Taipei, Sept. 21, 2007 (CENS)--A total of about 700,000 Bluetooth headsets, equal to a sales value of about NT$1.4 billion (US$42.42 million at US$1: NT$33), are expected to be sold in Taiwan, compared with about 500,000 units and value of NT$1 billion (US$30.3 million) in 2006, according to GN's Taiwan office president Hung Ming-hsien.
According to Hung, the penetration rate of office Bluetooth headset is expected to rise to 10% next year from about 6% currently.
Statistics released by IMS Research, a leading global research provider to global electronics market, also showed that the global Bluetooth headset sales are constantly increasing. In 2005, for example, the annual shipment growth rate of such product was 127%, and the global shipment volume is expected to reach 90 million units in 2008 and 182 million units in 2010 (with sales value of over US$9 billion).
Through its Jabra brand, GN is the global industry leader in headset solutions. Currently, Jabra headsets own a market share of 20% in Taiwan and its local distributor sold about 200,000 Bluetooth headsets in the past two years.
According to Hung, the local average retail price (ASP) of Bluetooth headsets is expected to maintain at about NT$2000 (US$60.6 at US$1: NT$33) thanks to the down-turning Bluetooth chip prices, but the functions of new headsets would be stronger.
In Taiwan, Hung said, cellphone Bluetooth headsets are expected to be the major sales force of Jabra products. In the world, the local president said, Jabra has taken a global share of 50%, while the No. 2 major rival Plantronics about 30%.
GN Taiwan recently pushed two new office wireless headset products for the local market, including the high-level GN9120 and the budget T5330.
According to Hung, major customers of Jabra's wireless headsets in Taiwan include the service centers of leading telecom carriers, while banks, police departments, cargo transport companies, couriers, etc. are potential customers.
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| | ![]() | | | New PTW Sales in Taiwan Up 14.4% in August
Taipei, Sept. 21, 2007 (CENS)--New powered two-wheeler (PTW) sales in Taiwan rose for the sixth consecutive month in August to over 77,000 units, according to statistics compiled by Ministry of Transportation and Communications (MOTC).
Kwang Yang Motor Co., Ltd. (KYMCO brand) maintained its long-term No. 1 position last month with a record market share of 36.3%.
MOTC data showed that a total of 77,612 new PTWs were sold in August, up 14.4% from the same period of last year, while an accumulated volume of 512,273 units were licensed in the first eight months, up 7.27%.
Market insiders attributed the rising sales volume in the last few months to PTW makers actively making their models compliant with the fourth-stage emission standard in Taiwan. All new PTWs sold from 2008 have to meet the fifth-stage emission standard.
The said conditions have driven PTW makers' profit margins down, though the volume rose.
Some PTW makers, however, attributed their rising sales volumes to the summer-vacation peak, and they are optimistic about sales in September and October too because the back-to-school demand.
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| | ![]() | | | Cathay Life, Cathay Century to Set up China Subsidiary to Tap Property Insurance
Taipei, Sept. 21, 2007 (CENS)--To reach the threshold set by the authority in China, Cathay Life Insurance Co. and Cathay Century Insurance Co. have decided to launch a joint venture to establish a subsidiary in Shanghai to tap the non-life insurance market in China.
It is reported that Cabinet-level Financial Supervisory Commission (FSC) has approved Cathay's China-bound investment. To date, FSC has already ratified seven domestic insurance firms to set up subsidiaries across the Taiwan Strait. Of which, three are non-life insurance firms, namely, Fubon Insurance Co., Cathay Century, and Mingtai Fire & Marine Insurance Co., and four life insurance companies, including Cathay Life, Shin Kong Life Insurance Co., China Life Insurance Co., and Taiwan Life Insurance Co.
So far only Cathay Life has cooperated with China Eastern Airlines to establish a subsidiary in China and the subsidiary is regarded as the first Taiwanese life insurance firm in the continent, which is aimed at exploring the life insurance market there. Nevertheless, FSC has also approved seven life and 10 non-life insurance firms to set up their representative offices in China.
In June of 2007 Cathay Century was approved by FSC to set up a subsidiary in China, however, the company did not meet the conditions set by Chinese authority of having assets of US$5 billion, a history of 30 years, and a representative office there for more than two years, the so called '5-3-2' required threshold.
So, to meet the threshold, Cathay Century decided to cooperate with Cathay Life, its sister company, to set up a subsidiary there. The projected subsidiary boasts capitalization of US$29 million (about NT$900 million) and will be the first Taiwanese non-life insurance firm in China.
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| | ![]() | | | MICE Seminar in APEC Economies to Kick Off Sept. 27 in Taipei
Taipei, Sept. 21, 2007 (CENS)--To promote Taiwan's exhibition and convention industry, the Bureau of Foreign Trade (BOFT) under the Ministry of Economic Affairs (MOEA) is organizing the 'Seminar on MICE Opportunities in APEC Economies,' which is slated for Sept. 27-28, 2007.
Huang Chih-peng, director general of BOFT, indicated that "MICE" is the abbreviation of "meeting, incentive, convention and exhibition" and MICE experts from APEC member economies are invited to join the upcoming seminar and hopefully more opportunities for international cooperation would be created for Taiwan's MICE industry.
Huang believed that the seminar would help promote Taiwan's MICE industry in the world arena and would help Taiwan win more chances to hold international conventions and exhibitions. In recent years APEC member economies in Asia, including South Korea, Thailand, Singapore and China, have been ambitiously involving in MICE industry and organized several international MICE meetings and seminars over the last two years.
Taiwan has also been actively involved in the MICE industry and has this year invited MICE experts from APEC nations to attend the projected "Seminar on MICE Opportunities in APEC Economies," not to mention last year's "Asian MICE Leader Forum" held in Taipei. The upcoming MICE seminar this year will discuss how to organize "green meetings" and how to organize environment-protection-oriented exhibitions in addition the theme of MICE opportunities in APEC nations.
APEC members to attend the MICE seminar in Taipei will include the United States, Canada, Japan, Australia, South Korea, Singapore and Hong Kong. Huang disclosed that the trade promotion committee of APEC has subsidized US$68,000 to BOFT for organizing the seminar.
The venue of the seminar will be the VIP room on the 4th floor of the Taipei International Convention Center and MICE professionals and related firms are welcome to attend the seminar. For details, please browse http://event.taitra.org.tw//APEC or call Miss Chu at 886-2-27255200 ext. 3529.
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| | ![]() | | | Tatung Leads in LCD TV Sales in Taiwan Over First 8 Months
Taipei, Sept. 21, 2007 (CENS)--Tatung Co., one of leading suppliers of household electronics in Taiwan, led in sales of its own-brand liquid crystal display (LCD) TVs in the domestic market over the past eight months of this year, according to company sources.
In response to an upcoming boom in the fourth quarter, Tatung has decided to increase orders for small- and medium-sized LCD TVs, such as 22- and 26-inch models, with its affiliate Proview Electronics Co. up to 10,000 units, as well as doubled production capacity in its plant in northern Taiwan to 20,000 units.
According to Tatung, it sold a record high of 13,200 own-brand LCD TVs in the Taiwanese market in August, with sales of 22-, 26- and 32-inch models all being the highest in the month. Over the past eight months of the year, Tatung has posted sales of 63,000 units, doubling the figure posted a year earlier, and decided to raise its shipment goal up to 100,000 units from an original projection of 96,000 units for entire this year.
This year, Taiwan's top three domestic LCD TV brands, namely Tatung, Chi Mei and BenQ, are all ambitious to become the top brand in the Taiwanese market, while Sony also aims for the No. 1 position in the market. However, as demand for LCD TVs in Taiwan is expected to grow by 30% to 700,000 to 800,000 units in the year, sales of 100,000 units may have become a basic threshold for those brands to take No. 1 position in the market.
Thanks to banner sales of LCD TVs and air conditioners, Tatung Consumer Products Taiwan Co. has scored aggregate revenue of NT$6 billion over the past eight months of the year, growing 26% from a year earlier.
Larry Hsiao, general manger of Tatung Consumer Products, said that with a boom coming in the fourth quarter, as well as the number of its owned 3C product selling centers to increase to 220 by the end of the year to drive up its sales, the company is very likely to challenge sales revenue of up to NT$10 billion for entire the year.
He added that to boost sales of large-sized, high-end LCD TVs, Tatung is scheduled to launch 46-inch high-definition models in early October, which will be priced low at between NT$60,000 to NT$80,000 per unit, and 40-inch models later, hoping to snap up more market shares. Consequently, the company will have comprehensive LCD TV lines in all sizes from 22 to 46 inches.
Also, Tatung's aggregate sales of air conditioners has reached 140,000 units over the past eight months of the year, higher than a projection of 130,000 units for entire the year and growing by 26.5% from a year earlier.
Noteworthy is that Tatung has totally taken advantage of Proview's production capacity, Hsiao said, and one of Proview's production lines has been fully booked for 8,000 LCD TVs per month by Tatung; however, that is not enough. Thus, Tatung has requested Proview to drive up the capacity up to 10,000 units per month, mainly for 22- and 26-inch models.
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| | ![]() | | | Tatung Leads in LCD TV Sales in Taiwan Over First 8 Months
Taipei, Sept. 21, 2007 (CENS)--Tatung Co., one of leading suppliers of household electronics in Taiwan, led in sales of its own-brand liquid crystal display (LCD) TVs in the domestic market over the past eight months of this year, according to company sources.
In response to an upcoming boom in the fourth quarter, Tatung has decided to increase orders for small- and medium-sized LCD TVs, such as 22- and 26-inch models, with its affiliate Proview Electronics Co. up to 10,000 units, as well as doubled production capacity in its plant in northern Taiwan to 20,000 units.
According to Tatung, it sold a record high of 13,200 own-brand LCD TVs in the Taiwanese market in August, with sales of 22-, 26- and 32-inch models all being the highest in the month. Over the past eight months of the year, Tatung has posted sales of 63,000 units, doubling the figure posted a year earlier, and decided to raise its shipment goal up to 100,000 units from an original projection of 96,000 units for entire this year.
This year, Taiwan's top three domestic LCD TV brands, namely Tatung, Chi Mei and BenQ, are all ambitious to become the top brand in the Taiwanese market, while Sony also aims for the No. 1 position in the market. However, as demand for LCD TVs in Taiwan is expected to grow by 30% to 700,000 to 800,000 units in the year, sales of 100,000 units may have become a basic threshold for those brands to take No. 1 position in the market.
Thanks to banner sales of LCD TVs and air conditioners, Tatung Consumer Products Taiwan Co. has scored aggregate revenue of NT$6 billion over the past eight months of the year, growing 26% from a year earlier.
Larry Hsiao, general manger of Tatung Consumer Products, said that with a boom coming in the fourth quarter, as well as the number of its owned 3C product selling centers to increase to 220 by the end of the year to drive up its sales, the company is very likely to challenge sales revenue of up to NT$10 billion for entire the year.
He added that to boost sales of large-sized, high-end LCD TVs, Tatung is scheduled to launch 46-inch high-definition models in early October, which will be priced low at between NT$60,000 to NT$80,000 per unit, and 40-inch models later, hoping to snap up more market shares. Consequently, the company will have comprehensive LCD TV lines in all sizes from 22 to 46 inches.
Also, Tatung's aggregate sales of air conditioners has reached 140,000 units over the past eight months of the year, higher than a projection of 130,000 units for entire the year and growing by 26.5% from a year earlier.
Noteworthy is that Tatung has totally taken advantage of Proview's production capacity, Hsiao said, and one of Proview's production lines has been fully booked for 8,000 LCD TVs per month by Tatung; however, that is not enough. Thus, Tatung has requested Proview to drive up the capacity up to 10,000 units per month, mainly for 22- and 26-inch models.
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| | ![]() | | | Opto to Build LED Manufacturing Plant in China
Taipei, Sept. 21, 2007 (CENS)--In light of a huge demand in the Chinese market for light-emitting diodes (LEDs) and business potential triggered by the Beijing Olympic Games, the Taiwan-based Opto Tech Corporation, a supplier of LED products, is to build an LED manufacturing plant there, according company sources.
The new plant will be able to generate 7 billion LED chips per month, doubling the figure posted by its existing plant in Taiwan. Besides, Opto has obtained authorization from one of its shareholders, the Japan-based Hitachi Ltd., for making high-end red LEDs. Opto is scheduled to start delivering the products by the end of this year, hoping to eliminate clients' doubts on license infringement.
Huang Y.C., general manager of Opto, said that he is quite confident that the LED industry will keep booming for 30 years. Besides, the company is also optimistic about a strong growth in the Chinese market for LEDs, where a compound growth reaches at least 20% every year, and will double in the next four years. And, this is the reason that Opto decided to build a plant in China.
Backed by help from Japan's Nichia Corporation to continue developing high-end LED products, Opto has delivered up to 49 million blue LEDs to Nichia this year, sharply growing 100% from a year earlier. With Opto to further activate other production for the latter, the figure will soar further to 100 million units next year.
Meanwhile, Opto has also made good progress in making red LEDs, as the firm and Hitachi, which specializes in producing epitaxy, already reached an agreement that the latter will supply epitaxy wafers to the former in the fourth quarter of this year for making high-end red LEDs. Thus, Opto has introduced two machines of metal-organic chemical vapor deposition (MOCVD) into its production lines for red LEDs, attempting to further drive up its gross profit rates.
Aided by the two aforementioned Japan-based big-sized companies, Opto has scored net profits of NT$554 million, or NT$1.11 per share, successfully turning around its business operations and outpacing quite a few suppliers in the sectors in Taiwan. The company is to challenge net earnings of NT$2 per share for entire the year.
Huang noted that after going through five to six tough years, Opto now tends to take a solid strategy. At present, the company has run at fully capacity of 3.5 billion LEDs per month, before activating production lines of its new plant in China, and maintains its monthly revenue at a level of NT$600-700 billion. However, by providing diversified products and streamlining operations, the company can further push up its profits.
To raise its gross profit rates, Opto already integrated all production of sensors, which is the company's most profitable product lines, in its No. 2 plant, with output of 500 million units per month to achieve a gross profit rate of more than 30%.
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| | ![]() | | | Growing Wealth Gap Arouses Worries of Social Problems
The wealth gap in Taiwan is growing and forcing the island's society more and more into the so-called M-shaped model.
This phenomenon is evidenced in a number of ways. For one thing, while the number of banking accounts of both the rich and the poor are growing, accounts between the two are shrinking.
At the end of May this year, total savings and time deposits in the banking system amounted to NT$11 trillion (US$333.33 billion at NT$33:US$1). The number of rich accounts (those with outstanding deposits of more than NT$1 million or US$30,303 each) was up to 1.7 million, accounting for NT$7 trillion (US$212.12 billion), or 63.6% of the total. At the same time, the number of poor accounts (those with deposits of less than NT$500,000 or US$15,151.5 each) was up to 7.17 million.
Savings accounts totaled 9.57 million, of which 1.29 million were rich accounts with combined deposits totaling more than NT$4 trillion (US$121.21 billion). While these accounts made up only 13% of the total number of savings accounts, they contained more than 50% of the total amount of money in these accounts.
Time deposits numbered about 410,000, or 21% of the total, but accounted for 80% of the total value of the deposits. On average, each of these deposits had a value of more than NT$7 million (US$212.121).
Local banks are seeking to take advantage of this situation by attracting more top-class clients. Some are issuing platinum cards, infinity cards, world-class cards, and other premium credit cards to customers with annual incomes above NT$2 million (US$60,606), and others are developing wealth management for their richer clients.
To attract wealthy customers, some banks are offering such incentives as free health check-ups, discounted skin-care services, and up to NT$80 million (US$2.42 million) worth of travel insurance.
Banks that are issuing premium cards include the Taishin International Bank, Cathay United Bank, Chinatrust Commercial Bank, Taiwan Shin Kong Commercial Bank, Far Eastern International Bank, American Express Bank, ABM AMRO Bank, and, starting only this year, Taipei Fubon Commercial Bank and Bank SinoPac.
Cathay says that its world-class cardholders spend at least NT$1 million (US$30,303) per year using the cards, and that some spend as much as NT$10 million (US$303,030).
New private banks are the most active in promoting wealth management. A recent survey indicates that Chinatrust is the tops in the field, followed by Taipei Fubon, Cathay, and SinoPac, all of which began operating in 1992-1993.
Each bank that offers wealth management services usually has been 100 and 200 financial consultants to serve its clients, and some boast that their wealth-management teams number 700-800. Thanks to the thriving stock market, the wealth-management business is doing well and reaping juicy profits.
Observers note that Taiwan's economic structure, and thus its social structure, has experienced substantial changes over the past seven years. The wealthy are using their money to increase their holdings by trading in both the stock and real estate markets.
Even as the rich are getting richer, however, the middle and lower classes are suffering job losses, salary reductions, and earlier retirement. People in this group are increasingly uncertain about the future, and most are worried about keeping their jobs and making enough money to support their families and buy their own homes.
Observers are worried that the widening gap between the rich and the poor is causing an unfair distribution of wealth and leading to the possibility of dire consequences: hatred and jealousy directed against the rich, and ever-stronger feelings of dissatisfaction and depression among the poor. The end result, the observers fear, may be a distortion of social values and a rise in social disturbances. (JL, August 2007) | |
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