| Prime News | | ![]() | ![]() | Formosa Automobile May Exit Sedan Production
Taipei, Sept. 12, 2007 (CENS)--With termination of production for its existing two sedan models, Formosa Automobile Sales Corp. a subsidiary of Formosa Plastic Group, is likely to exit sedan production, as it has yet to reach an agreement with its technological partner GM-Daewoo for licensing production for new model Matiz II.
Formosa Automobile has stopped its sedan production, as its existing two models, Formosa I and Formosa II, can not meet the new waste-gas emission standards, scheduled to become effective.
Moreover, talk with GM-Daewoo over licensing of follow-up model Matiz II has been stalled by difference over price, as quote offered by GM-Daewoo for the 800-c.c. model reaches NT$400,000 per unit, NT$100,000 higher than Formosa II, also a 800-c.c. model, and even NT$70,000 more expensive than existing 1,300-c.c. models in the Taiwanese market, making it entirely uncompetitive in the domestic market, according to Formosa Automobile officials.
Should its withdrawal from sedan production be finalized, Forma Automobile will be forced to end its nine-year effort in developing own-brand auto operation, after having incurred loss of NT$2 billion, and be left only with the businesses of DAF heavy-truck assembly, agency for Czech's Skoda sedan, and auto-freight transport, the latest item being put under its fold by FPG last year, in order to improve its finance.
Formosa Automobile was established in October 1998 and rolled out the first Formosa I sedan, branded Megnus, in December 2000 at its Tatu plant in Taichung county, which it acquired from Sanfu Auto in 1999. Technologies for Megnus and its follow-up model Formosa II Matiz were licensed by Daewoo on the case-by-case basis before the latter's takeover by GM.
Over the past five years, Formosa Automobile sold only 29,5000 Formosa I and II sedans, or 6,000 a year, 30% lower than monthly sale of Hotai Motor, the leading Taiwanese auto vendor and Toyota's Taiwan agent.
Auto production appears to be one of FPG's major failures in business diversification, along with its failed attempts to step into opto-electronics and communications, incurring losses of NT$6 billion and NT$800 million in these two fields, respectively. The group, though, has scored extraordinary success in branching out into DRAM (dynamic random access memory), PCB (printed circuit board), and IC wafer.
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| | ![]() | | | Int'l Logistics Will Be Eligible for Investment Incentives
Taipei, Sept. 12, 2007 (CENS)--International-logistics operators will be entitled to five-year tax holiday or investment tax credit for investment projects exceeding certain thresholds, according to draft measures formulated by the Department of Commerce (DOC), the Ministry of Economic Affairs (MOEA).
The draft "Measures for Encouraging International Logistics Business" will be forwarded to the Executive Yuan for approval and implementation soon, following the last project meeting convened by the Council for Economic Planning and Development (CEPD) this Friday.
The incentives, though, will lapse along with the expiration of the "Statute for Industrial Upgrading" in 2009. DOC officials noted that international logistics will be eligible for the incentives as a strategic industry, due to its capability to offer one-stop service, covering warehousing, transshipment, testing, and repair and maintenance.
Over 100 international-logistics operators in the five free-trade harbors will be major beneficiaries of the new measure.
To qualify for the incentives, international logistics operators must put forward investment projects with paid-in capital over NT$100 million, including NT$50 million for buildings or equipment procurement, or NT$30 million without involving buildings or equipment procurement.
Operators with investment projects exceeding only NT$10 million in scale can also qualify if they can boost their annual revenue by NT$300 million by the completion of the projects.
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| | ![]() | | | CSC Extends Presence From Vietnam to Saudi Arabia, India
Taipei, Sept. 12, 2007 (CENS)--China Steel Corporation (CSC), Taiwan's largest integrated producer of steel products, is stepping up the pace of investing overseas. In addition to investing in Vietnam, the company will build presence in Saudi Arabia and India.
CSC noted it has resolved to invest in Vietnam in collaboration with such big shareholders as the Japan-based Sumitomo Metal Industries Corp., and such domestic steel makers as Kao Hsing Chang Iron & Steel Corp., Chun Yuan Steel Co. and Vulcan Industrial Corp.
A domestic institutional investor said CSC will adhere to a long-term investment policy because of its efforts to make heavy investments overseas.
Over the past several years, some heavyweight steel makers, including Mittal Steel Group and Pohang Steel Co., have been making all-out efforts to expand their presence in Asian market. In the meantime, such Asian leaders as BaoSteel Corp., Wuhan Steel Corp. are launching integration at home and abroad. Based on the its strength in Taiwan, CSC is tapping the markets of mainland China and Southeast Asia.
CSC said it has felt pressure from E Untied Group and Formosa Plastics Group as the former is building a large-sized steel mill in Vietnam and the latter has resolved to invest in a stainless-steel plant in Fujian province of mainland China.
As a government-linked enterprise, CSC has met difficulties to launch heavy investments overseas. But it is easy for the company to deploy distribution channels abroad.
At present, CSC has established two metal-cutting centers, one in Foshan of Guangdong province and one in Shanghai Municipality, mainland China with an aim to provide direct services to clients there. In the foreseeable future, the company will set up distribution channels in southwestern, northern and northeastern China.
In addition to expanding presence in the mainland, CSC has also resolved to invest in Vietnam and Thailand by forming strategic alliances with business partners there.
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| | ![]() | | | MOEA Deregulates Imports of 48 Items From China
Taipei, Sept. 12, 2007 (CENS)--The Bureau of Foreign Trade (BOFT) under the Ministry of Economic Affairs (MOEA) recently convened a cross-ministry meeting and resolved to deregulate imports of 48 items from mainland China, the largest deregulation over the past two years.
The 48 deregulated items include 21 items of apparel, including those made on the OEM (original equipment manufacturer) basis. At the meeting, the MOEA has also agreed to extend the imports of mainland-made wire rods for half a year from September 30 until March 31.
A high-ranking official of the BOFT said the imported wire rods from the mainland have somewhat met the demand of domestic fastener manufacturers. To continually bolster the international competitiveness of domestic fastener industry, the MOEA has resolved to extend imports of wire rods from mainland for half a year.
Taiwan has entered the World Trade Organization (WTO) for five years, but the ban on imports of mainland-made products hasn't yet been totally lifted. This policy has met suspicion from the mainland. The U.S. and European chamber of commerce have also pressured Taiwan government to deregulate imports of mainland-made products.
Faced with the criticism from the WTO member countries, Economics Minister Steve R.L. Chen has instructed the BOFT to set up a work panel to discuss imports of mainland-made products. The BOFT has resolved to convene a cross-ministry meeting to discuss the import issue in the middle of September.
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| | ![]() | | | Taiwan's Silicon Foundry Giants Report Record August Revenues
Taipei, Sept. 12, 2007 (CENS)--Taiwan Semiconductor Manufacturing Co. (TSMC), United Microelectronics Corp. (UMC) and Vanguard International Semiconductor Corp. (VISC) saw their revenues for August hit new highs.
In August, TSMC, currently the world's No.1 pure silicon-foundry supplier, had consolidated revenue of NT$30 billion (US$909 million at US$1:NT$33), reaching a new high for the second consecutive month. The No. 2 player UMC reported a three-year high of NT$10.4 billion (US$316 million) in August revenue, and VISC raked in NT$1.4 billion (US$42 million), its highest so far this year.
The TSMC's August result was up 1.5% from a month earlier and 8.1% from the same period of last year. Throughout the first eight months this year, the company's total revenue came to NT$199.3 billion (US$6 billion), losing 7.4% year on year.
Institutional investors originally projected TSMC's revenue for August at NT$29.8-30.05 billion (US$903-910 million). The August result helped the company accomplish over 68% of its goal for this year. Accordingly, the company's vice president and spokesperson, Lora Ho, said TSMC has raised its revenue projection for the third quarter to NT$87-89 billion (US$2.63-2.69 billion), slightly up from the original projection of NT$85-87 billion (US$2.57-2.63 billion).
Originally, TSMC projected its gross margin for the third quarter to reach between 43% and 45% and operating net income to run from 33% to 35%. Now, the company hiked the two earnings goals by barely a percentage point.
Industry watchers pointed out the projected hikes would ease the fears that declining average selling price (ASP) would erode the company's profitability. They expected TSMC's business outlook for the fourth quarter to remain upbeat on grounds that the world's top five fabless houses, including AMD-ATi, Nvidia, Qualcomm, and TI, would likely increase foundry contracts to TSMC in the fourth quarter.
Industry insiders indicated TSMC's capacity utilization rate would hit 100% in the fourth quarter from 83% posted in the first quarter this year. Taiwanese IC insiders pointed out that the foundry giant has already completely sold out its 200-mm and 150-mm capacities so far.
UMC's revenue result for August represented a 3.79% increase from a month earlier and 10.8% gain from the same period of last year. Despite the hefty August growth, the company's total revenue for the first eight months this year, at NT$68.6 billion (US$2.07 billion), slightly inched down 0.21% year on year.
Considering UMC had revenue exceeding NT$10 billion (US$303 million) mark this July and August, institutional investors expected the company's revenue for this quarter to cross NT$30 billion (US$909 million), increasing over 20% from a quarter earlier, along with its capacity running close to 90%.
UMC executives pointed out that Taiwanese fabless houses have contributed half of the company's revenue by using half of its capacity. Among its major domestic customers are MediaTek, Realtek Semiconductor, Novatek Microelectronics, and Silicon Integrated Systems (SiS). These fabless houses have entered into peak season this quarter.
Industry watchers estimated MediaTek's revenue for August at NT$8 million (US$242 million) and revenue for the third quarter will likely grow 30% from the second quarter. Realtek and Novatek posted revenues of NT$1.66 billion (US$50 million) and NT$3.4 billion (US$103 million), respectively, for August. SiS's August revenue was NT$630 million (US$19 million), the highest in eight months and increasing 16% from this July.
VISC's revenue for August represented a 3.4% surge from a month earlier and a 21.45% increase from the same period of last year, thanks to strong demands for its foundry capacity for LCD-chip production. The company's total revenue for the first eight months this year was NT$10.1 billion (US$307 million), up 29.4% from last year.
Institutional investors projected VISC's wafer shipments to increase to 228,000 units in the third quarter and its monthly output to surge to 70,000 wafers this quarter from last quarter's 65,000 wafers. The company's capacity is running over 100% now.
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| | ![]() | | | Macronix Mulls Venturing Into Solar Energy Business
Taipei, Sept. 12, 2007 (CENS)--Chipmaker Macronix International Co., Ltd. is assessing the possibility of branching out into solar-cell manufacturing and will likely retool its 150-mm wafer fab for the production, according to people familiar with the company's solar-energy plan.
Industry watchers estimated solar-energy business would help double the company's revenue and boost its gross margin. They expected the company to emulate Mosel-Vitelic Inc. to use 150-mm fab to produce solar cells in the beginning and then expand into polysilicon manufacturing.
Currently, the company's 150-mm fab is producing logic chips on foundry basis, at a monthly capacity of 40,000 wafers of chips with revenue of NT$100-200 million (US$3-6 million at US$1:NT$33).
Industry watchers pointed out that should the company use its 150-mm fab to produce the cells, it will be the third Taiwanese chipmaker after Mosel-Vitelic and Episil Technologies Inc. to use the facility to make the product.
They analyze that using 150-mm fab to produce solar cells is more profitable than making chips on foundry basis since rising mainland Chinese silicon-foundry suppliers are more professional than Taiwanese rivals in cutting prices.
Once the company equips itself with a solar-cell production line capable of turning out 30 megawatts of cells, the production line will inject NT$3 billion (US$90.9 million) into the company's annual revenue, much higher than the contribution from foundry manufacturing.
Industry watchers expected Macronix to smoothly enter solar-cell business considering its good relationship with Japanese chipmakers, whose business covers solar energy.
In August alone, the company's revenue hit a 10-month high of NT$2.4 billion (US$72 million), up 20% from a month earlier. In the first eight months this year, the firm's total revenues came to NT$15.4 billion (US$468 million), increasing 13.2% from NT$13.6 billion (US$413 million) posted a year earlier.
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| | ![]() | | | BenQ Commences New Operation After Spin-off
Taipei, Sept. 12, 2007 (CENS)--Taiwan's BenQ Corp. recently kicked off its new operation after completion of its spin-off project, which separated the company into branding and manufacturing businesses.
After the spin-off, BenQ will keep its branded company and continue to sell and market products under its own BenQ brand name. The company will keep its headquarters in Taipei, northern Taiwan with a paid-in capital of NT$3.62 billion (US$109.7 million at US$1: NT$33) while its revenue is expected to exceed NT$100 billion (US$3.03 billion) in 2009.
At the initial stage, BenQ will be 100% owned by Qisda Corp., its parent company which now focuses on manufacturing and will gradually reduce its shareholdings in BenQ. BenQ will explore options for strategic partners and investors.
The newly spun-off BenQ has an independent board of directors and management team, including K.Y. Lee as chairman, Jerry Wang vice as chairman, and Conway Lee as president and CEO. Other members of the management include Peter Chen, general manager of technology product center; Adrian Chang, president of BenQ Asia Pacific; Michael Tseng, president of BenQ China; and Hank Horng, managing director of BenQ Taiwan.
Currently, according to the new president and CEO, sales in Europe, Asia-Pacific, and mainland China make up about 40%, 25%, and 25%, respectively of BenQ's revenue and America 10%. In addition, he added, BenQ would maintain its multiple product lines and continue to push new flagship products in six months, which would feature compact size and lightweight. For example, an eight-million-pixel digital camera model, the X800, with a thickness of less than 1 cm and integrated digital camera products, mobile TVs, etc. are on their way.
BenQ would put most resources in product and distribution marketing works, Lee added, while decrease spending on brand-image marketing.
K.Y. Lee claimed that since the inception of BenQ more than five years ago, the company has been trying to establish the brand as a cheerful and trendy hi-tech electronics brand. "Going forward, we expect to see faster and stronger growth in our brand through this new focused structure," he added. "I strongly believe that our leadership of choice will bring us to new heights."
With a total of more than 2,000 talents from over 40 nationalities, and branch offices in 28 countries worldwide, BenQ said, it would continue to market products that contribute to the company's mission of Bringing Enjoyment and Quality to Life.
Currently, BenQ products are sold to some 100 countries, and its product portfolio includes digital projectors, LCD monitors, LCD TVs, digital cameras, cellphones, notebook PCs, storage devices and media, and human interface devices such as the mouse and keyboards.
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| | ![]() | | | Carplus Ventures Into Used-car Sales
Taipei, Sept. 12, 2007 (CENS)--Carplus Auto Leasing Corp., the largest car-leasing firm in Taiwan, recently announced commencement of used-car sales business, making it a pioneer among local counterparts to diversify into such segment.
Carplus's first used-car sales point is located in Taipei, northern Taiwan, and the firm said that it plans to continue setting up new dealerships in other big cities in central and southern parts of the island.
Carplus president Chen Shih-chuan pointed out that it used to auction off cars which had been used two to three years by long-lease enterprise customers who returned them for new models. As these returned cars are often maintained by chauffeurs and original factories, he added, the auction prices of these vehicles were lower than estimates.
Chen said that Carplus takes in an average of about 1,200 leased cars every year, making it the largest source of used cars from a single enterprise in Taiwan. The carefully-upkept luxury cars are expected to be a strong advantage for Carplus's used-car sales division, which also offers installment payment as preferential terms to buyers to further strengthen its competitiveness in the used-car market.
The president stressed that Carplus' used-car business is expected to create a new channel for disposing of returned, leased cars and create a new profit-making business model for the car-leasing firm.
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| | ![]() | | | Taiwan's Forex Reserves Plunge US$4.9 B. to US$261.372 B. in August
Taipei, Sept. 12, 2007 (CENS)--Taiwan's foreign exchange reserves stood at US$261.372 billion at the end of August, the lowest in one year, and witnessed the largest monthly fall of US$4.915 billion since March of 1996, which was the second largest drop ever recorded, according to the central bank here.
A senior official at the central bank indicated that Taiwan experienced the largest monthly decline of US$7.534 billion in forex reserves in March of 2006, when a purchasing spree of gold and greenbacks occurred after China's missile threat on Taiwan due to its first presidential election.
The central bank attributed the sharp drop of forex reserves last month to the impact of U.S. sub-prime loan storm, which ignited the withdrawal of foreign currencies from emerging markets, including Taiwan.
As of Aug. 17, the net inflow of foreign equity funds decreased by US$5.184 billion from that posted at the end of July, and the decrease of foreign funds helped lower the level of forex reserves as well. Normally the monthly increase of Taiwan's forex reserves come mainly from the inflow of foreign funds, investment gains from existing forex reserves, and the interest income from the deposits of the reserves in banking system.
At the end of June, China remained the world's largest holder of forex reserves, boasting forex reserves of US$1.3326 trillion. Japan and Russia were the second and third largest with US$902.5 billion and US$305 billion, respectively. Taiwan took the fourth place and South Korea the fifth.
At the end of August, South Korea's forex reserves enjoyed a net increase of US$500 million to reach US$254.9 billion, quite close to Taiwan's corresponding US$261.327 billion.
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| | ![]() | | | FSC Encourages Loans to Small- and Medium-Sized Enterprises
Taipei, Sept. 12, 2007 (CENS)--To encourage domestic banks to extend loans to small- and medium-sized enterprises, the Cabinet-level Financial Supervisory Commission (FSC) has effectively implemented a three-year program to promote such loans.
The program offers some incentives to banks that show good performance in granting such kind of loans. The first year of the program started from July 2005 to June of 2006, the second year from July 2006 to June 2007, and the third year from July 2007 to June 2008. The program set the goal for such loans at NT$200 billion (US$6.06 billion) each year.
In the first year the loans extended by domestic banks totaled NT$321.9 billion (US$9.75 billion at US$1 = NT$33), much higher than the goal. The top three providers during the year were E. Sun Bank, Hua Nan Commercial Bank, and Taiwan Cooperative Bank. Those that closely followed were Land Bank of Taiwan, Chinatrust Commercial Bank, Taipei Fubon Commercial Bank, and Bank of Taiwan.
In the second year, the loans reached NT$256.9 billion (US$7.78 billion), also higher than the goal but lower than the corresponding figure recorded in the first year. During the year, First Commercial Bank topped such loans of NT$44.4 billion (US$1.35 billion), followed by E. Sun with NT$39.6 billion (US$1.2 billion).
Based on the good performance shown in the first and second years, FSC is confident that the third year will be as good as the first two to reach the goal as well.
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| | ![]() | | | Production Value of Global LED Backlight Sector to Exceed US$1 B. in 2011
Taipei, Sept. 12, 2007 (CENS)--With light-emitting diodes (LEDs) becoming heavily applied in backlights of display panels for notebook PCs, monitors and liquid crystal display (LCD) TVs, production value of the sector worldwide is expected to reach US$1 billion in 2011, according to the U.S.-based market survey institute, Mclaughlin Consulting Group (MCG).
In addition to small-sized models, LED backlights have been widely used in medium-sized display panels this year, with a penetration rate of more than 50%, and may become prevailing in applications for notebook PCs next year as well. The world's major brands of notebook PCs, including Japan's Fujitsu, Toshiba and Sony, and U.S.'s Apple, HP and Dell, already launch their own notebook PCs with LED backlights this year. Incidentally, Taiwan' Acer also unveiled its LED notebook PCs in the year.
MCG noted that in light of production costs, makers are inclined to adopt cold cathode fluorescent lamps as backlights in their notebook PCs, which are cheaper than LED backlights and perform well in colors. However, as LED-built-in notebook PCs may turn popular next year, costs of LED backlights will probably decline rapidly to boost a penetration rate of such products in the market for large-sized display panels.
Insiders in the sector said, this year those major notebook PC brands still tend to launch LED models on merely a trial basis, with a penetration rate of only 3% in the market; nevertheless, the rate is expected to reach 10% next year. Based on the same specs between general notebook PCs and LED models, the latter sell for more than NT$70,000 at present. But, the selling price may sharply slip to only NT$50,000 next year, giving a boost to sales of the models.
MCG projected a penetration rate of LED backlights in the market for display panels of notebook PCs will exceed 30% in 2010, and up to 50% in 2012. Besides, LED backlight applications in monitors and LCD TVs will become popular as well. This means a strong growth in sales of LED backlights. In 2011, furthermore, the sales of the products may reach US$1 billion worldwide.
However, Taiwanese makers of LEDs still has a tough time profiting from the promising global market for LED backlights, because LED chips for backlights of notebook PCs, for example, must be extremely small and lightweight, as well as feature highly advanced technologies and strict requirements in specs.
But, compared to Japanese suppliers in the sector, who have owned key technologies in making LED chips for notebook PCs, some Taiwanese suppliers have already opened a window of business by penetrating the global market for LED backlights for monitors.
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| | ![]() | | | AUO to Challenge Annual Revenue of NT$400 B. This Year
Taipei, Sept. 12, 2007 (CENS)--The Taiwan-based AU Optronics Corp. (AUO), one of the world's leading suppliers of display panels, is very likely to generate annual revenue of NT$400 billion, a historical high, for this year, according to company sources.
Besides, with full production capacity in the sector unable to meet explosive demand for display panels in 2008, AUO, which just activated its new plant of liquid crystal display modules (LCMs) located in China, optimistically forecast its sales for next year to be better than that posted this year.
As the market for display panels booms, the world's leading suppliers in the sector have eagerly taken moves to expand their production capacity, with SHARP to have the first 10-generation wafer plant, Samsung and LPL to build two 8-generation plants.
Those moves also prompt Taiwan's AUO and Chi Mei Optoelectronics Corp. to consider when to build their own 8-generation plants. However, according to Chen Hsuan-bin, deputy chairman of AUO, this may mean an alert that excessive supply of display panels will cause a recession in the industry after 2009.
Lee Kun-yao, chairman of AUO, said the company is very likely to attain annual revenue goal of NT$400 billion for this year, a historical high, and the figure will further move up next year. At present, AUO is still enjoying huge orders from its clients.
He added that most production capacity of the 3- and 4-generation plants has been booked for hot-selling digital photo frames this year. This makes selling prices of small- and medium-sized display panels bottom out, and makes suppliers in the sector have to switch production of models for information technology (IT) products to their 5-generation plants from the 3- and 4-generation ones, and 22- and 24-inch models for monitors originally produced in the 5-generation to the 6-generation plants.
Meanwhile, Lai-juh Chen, president of AUO, indicated that selling prices of display panels will depend on changes of supply and demand. And now, with tight supply of the products occurring in the sector, AUO will enjoy bright prospects this year and next year.
Also, the two most popular sports events globally, namely Beijing 2008 Olympic Games and UEFA Championship League, will boost demand for display panels and create huge business potential in the Chinese market for LCD TVs, according to Chen.
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