| Prime News | | ![]() | ![]() | Gov't Allows Domestic Funds to Make Limited Investments in China-Related Stocks
Taipei, Oct. 25, 2007 (CENS)--Domestic mutual funds and discretionary-account operations will be able to invest a portion of their net assets in Chinese stocks and H and red-chip stocks on Hong Kong and Macao bourses, similar to the existing regulation for offshore funds sold in Taiwan, decided the Executive Yuan (the Cabinet) yesterday (Oct. 24).
Ceiling for investment in Chinese stocks is set at 0.4% of those funds' net assets and 10% for investment in H and red-chip stocks, or stocks of Chinese state enterprises and Chinese-invested enterprises, respectively, in Hong Kong and Macao, equivalent to the existing ceilings for offshore funds.
The liberalization will benefit immediately 15 Asian-regional funds issued by 15 domestic investment trust firms totaling NT$106.3 billion in scale, allowing them to invest up to NT$11 billion in those stocks.
The policy will grant domestic equity funds an equal footing with offshore funds, which have been able to invest part of their net assets in such stocks since 2004, enabling them to participate in the strong rally of the Chinese and Hong Kong markets in recent years.
Market insiders noted that the move will legalize substantial underground investments in such stocks by local people in recent years, enabling them to make such investments via a safer channel, in addition to bringing more business to domestic fund managers and taxation income to the government.
Domestic fund managers welcome the government's decision but urge it to raise the investment ceilings, noting that Chinese and Hong Kong stocks now boast 50% share in the MSCI Asia-Pacific Index (excluding Japan).
Market insiders also caution investors to be aware of the risks for such investments, as Hong Kong H-stock and red-chip stock index has soared 70% so far this year.
Statistics of the Financial Supervisory Commission (FSC) show that as of the end of September this year, total assets under management of domestic fund managers had topped NT$2.21 trillion, including 213 funds for overseas investments totaling NT$710 billion in scale, and that of discretionary-account operations had amounted to NT$750 billion. Meanwhile, local people had invested NT$1.87 trillion in 754 offshore funds sold on the island.
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| | ![]() | | | Venture-Capital Tycoon Taken Into Custody for Insider Trading
Taipei, Oct. 25, 2007 (CENS)--Ko Wen-chang, chairman of WK Technology Fund, Taiwan's leading venture capital fund, was taken into custody yesterday (Oct. 24) for implication in an insider trading involving takeover of Green Point of Taiwan by Jabil Circuit of the U.S. late last year.
Ko was put behind bars, along with Ko Cheng-ching, president of WK Technology Fund, and Li Jung-hsun, vice president. They have been charged of profiting some NT$890 million from the deal illegally. If convicted, they are liable to minimum imprisonment of five years for the crime. In addition, they also face charges of blocking investigation, forgery, and concealment of evidence.
Lin Chin-tsun, chief prosecutor of the Taipei prosecutors' office, reported that after learning of the takeover offer, WK Technology Fund, a major shareholder of Green Point, bought up the latter' shares, via its subsidiaries, during the July-December period last year, realizing some NT$800 million of profit, making it perhaps the largest insider trading in Taiwan ever.
The takeover deal was publicized by Jabil Circuit, the world's sixth largest EMS (electronic manufacturing service) provider, last November offering to buy up Green Point shares at NT$109 per share, totaling NT$30 billion in value for the deal. Green Point is a major mobile-phone plastic-case maker, counting Motorola and Sony Ericsson among its major clients, whose operation complements that of Jabil Circuit, which produces mobile-phone cases for Nokia.
The WK Technology Fund is a founding investor of Green Point, playing the role of an angel investor from the outset, and now boasts 15% stake in the company.
Ko's arrest has sent a shock wave in the domestic venture-capital field, due to his prestigious status in the circle, which wins him the title "godfather" of the Taiwanese venture capital industry.
He was a veteran industrialist, boasting various prominent industrial stints, including chairman of HP Taiwan, before plunging into the venture capital business in 1989, when he founded the WK Technology Fund. The fund now boasts paid-in capital of over NT$17 billion, managing six domestic funds and three overseas funds. He was elected as the first chairman of the Taiwan Private Equity & Venture Association in 1992.
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| | ![]() | | | CSC to See Earnings Grow Over 50% in First 3 Quarters
Taipei, Oct. 25, 2007 (CENS)--Despite declining earnings posted by Pohang Steel Co. (POSCO), South Korea's largest steelmaker, the Taiwan-based China Steel Corporation (CSC) is expected to see a 50% growth in year-on-year pretax revenues in the first three quarters of this year.
A market analyst attributed the declining earnings posted by POSCO to its concentration on stainless steel, which has seen slumping prices in the third quarter of this year. As CSC doesn't focus on the production of stainless steel, the market analyst anticipated CSC's profitability won't be adversely affected for the rest of this year.
Because of the impact from the declining prices of stainless steel, POSCO posted a 1.2% year-on-year slump in net profits in the third quarter of this year.
An industry insider said CSC would see flat performance in profitability in the third quarter of this year, compared to that of the preceding one, because it won't produce stainless steel like POSCO. But CSC's third-quarter operations will be modestly impacted by the increase in maritime freightage.
The company's internal audits showed that CSC posted NT$41.936 billion (US$1.29 billion) in pretax earnings, or NT$3.64 (US$0.112) in earnings per share, in the first eight months of this year, up 58.4% year-on-year.
CSC registered NT$15.086 billion (US$464.18 million) in earnings in July and August, equivalent to that posted in April and May. Based on the July and August earnings, CSC won't see sharp decline in earnings in the third quarter of this year. In addition, the fourth quarter of a year is traditionally a booming season for the sale of steel products. An institutional investor estimated CSC will see pretax earnings reach NT$62 billion (US$1.9 billion) this year, up 30% year-on-year.
Besides CSC, other leading manufacturers of steel, including Tung Ho Steel Enterprise Corp. Feng Hsin Iron & Steel Co., also posted promising earning performance in the first three quarters of this year.
Tung Ho said it registered NT$4.235 billion (US$130.3 million) in pretax earnings, or NT$4.52 (US$0.14) in earnings per share, in the first three quarters of this year, up 29% year-on-year. Feng Hsin scored NT$2.676 billion (US$82.33 million) in pretax earnings, or NT$4.72 (US$0.14), in the first three quarters of this year, up 1% from the corresponding period of the previous year.
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| | ![]() | | | Moody's Confirms Baa3 Rating for Wan Hai Lines
Taipei, Oct. 25, 2007 (CENS)--Moody's Investors Service Inc. recently confirmed Wan Hai Lines Ltd.'s Baa3 issuer and bond ratings. The ratings outlook is negative. This includes the rating review initiated on June 18 following Wan Hai's announcement that it is placing order for six 4,200 TEUs (twenty-foot equivalent units) container vessels for delivery in 2010 and 2011.
"Wan Hai has turned around its declining profitability as evidenced by higher sales and EBITDA (earnings before interests, taxes, depreciation and amortization) reported in first half of 2007," said Peter Choy, a Moody's vice president and senior credit officer, adding that these results were driven by better market freight rates and improved cost controls through hedging bunker oil cost and managing chartered freight payments.
"Moreover, Moody's does not expect Wan Hai to increase its debt leverage materially to accommodate funding for the six new vessels to be delivered in 2010 and 2011, due to the trend of improving profitability," comments Choy. "This is also supported by Wan Hai's revised strategy to focus 80% of its business on Intra-Asia routes, while controlling cost and maintaining good liquidity position-backed by its substantial deposits and investments that totaled NT$28.6 billion (US$880 million) as of June 30 this year.
Moody's noted Wan Hai's new 6,000 TEUs container vessels are unlikely to expose the company to any cash-flow risk under the term charter arrangements to MISC Berhad Co. Potential losses also appears unlikely if Wan Hai chooses to dispose of the vessels upon the maturity of term charter.
Moody's said Wan Hai's credit ratios are weak for an investment-grade rating and are the primary driver of the negative outlook. These metrics will need to improve in the next two years if the company is to maintain its Baa3 rating. While Moody's believes there is a good chance of this, previous volatile profitability under difficult liner market conditions—combined with the challenges from its fleet rationalization—highlight that the company faces material risks which justify the negative ratings outlook.
Wan Hai was established in Taiwan in 1965 and was listed on the Taiwan Stock Exchange in 1996. In 1976, it started container liner services, primary focusing on the intra-Asia container transportation market. It operates a fleet of 76 vessels with a total capacity of 127,859 TEUs, offering intra-Asia, trans-Pacific, Asia-Middle East and Asia-Europe container freight services.
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| | ![]() | | | Forum Organized to Highlight Taiwanese Brands
Taipei, Oct. 25, 2007 (CENS)--A forum organized by the semi-official Taiwan External Trade Development Council (TAITRA) to promote Taiwanese brands to the world will be held from tomorrow (Oct. 26) at Taipei International Convention Center.
Senior managers from the world's top 100 brand-name enterprises will trade notes with their counterparts from Taiwan's top 20 brand-name enterprises at the three-day forum.
Executives from the Taiwanese branded enterprises include Asustek President C.H. Tseng, Trend Technology President W.G. Hung, D-Link President T.C. Liao, BenQ Vice Chairman W.C. Wang, ZyXEL Communications Chairman S.Y. Chu, A-DATA Technology Chairman L.P. Chen and Chunghwa Telecom Chairman Hochen Tan.
Their counterparts from international brand-name enterprise include Nike Taiwan General Manager J.Y. Chu, McDonald's Taiwan President M.Y. Lee, HP Taiwan Managing Director Jonathan Yang, Microsoft Taiwan Chief Operating Officer Alec Cooper, Yahoo Taiwan General Manager H.L. Hung, and Sony Taiwan President Kenji Sakai.
The forum was first held last year sponsored by the Bureau of Foreign Trade, the Ministry of Economic Affairs (MOEA). It is part of a government-funded seven-year development program to promote Taiwan's brand names.
Under the program, a venture capital has been set up to develop brand-names, bank loan statues have been drawn to encourage brand-name development projects, and value assessment systems have been established for brand names.
Beyond that, the government has worked out plans to cultivate brand-name development talents, set up brand-assistance and information platforms, and organized forums to promote brand names.
The ministry pointed out that Taiwan's top 10 brand names generated a product value of US$5.1 billion last year.
Totally, 800 to 1,200 specialists from government organizations, academic circle and the private sectors will attend the forum. Premier J.S. Chang, Industrial Technology Research Institute (ITRI) Chairman S.Y. Lin and Minister M.Y. Ho of Council for Economic Planning and Development are invited to make speeches at the opening ceremony.
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| | ![]() | | | FPG's DRAM Business to Axe Capex Next Year
Taipei, Oct. 25, 2007 (CENS)--Nanya Technology Corp. recently announced it will halve capital expenditure to NT$30 billion (US$909 million at US$1:NT$33) next year from this year's level while Inotera Memories Inc. said it will axe the spending by around 30% to NT$30 billion in the meantime.
Both companies are DRAM chipmakers under the Formosa Plastics Group (FPG). Industry watchers pointed out that it is the group's deepest-ever cut on DRAM expenditure.
Nanya will spend NT$60 billion (US$1.8 billion) throughout this year while Inotera will spend NT$45 billion (US$1.3 billion), a revised number from NT$51.4 billion (US$1.5 billion).
The two chipmakers' 2008 expenditure cuts came after Hynix Semiconductor announced that it would scale down production addressing slumping DRAM prices.
Industry watchers pointed out that the recent weak DRAM mark has spurred fears that any capacity expansion will trigger heavier downward pressure on DRAM prices. They expected expansion slowdowns at Hynix, Nanya and Inotera to help keep DRAM prices from further dipping.
Inotera President Charles Kao stressed his company is taking a "highly restrained expansion plan." He said his company's capital expenditure for next year will mostly go to projects to upgrade 90-nanometer process to 70-nm node at its two factories.
Although Inotera will unlikely add new capacities to its factories next year, its process upgrading plan is expected to boost output by 50%. The output increase is estimated to be roughly in proportion to demand increase, unlikely leading to excessive capacity.
For Nanya, boosting capacity at its 300-nm wafer fab to 62,000 wafers a month from current 30,000 wafers is where its money will be spent next year. The company has already raised NT$12 billion (US$363 million) in cash as a portion of the fund for next year.
Nanya's executives expected additional capacity to boost the company's total output by 80% from this year's level. Meanwhile, the company will shift product line to the pricier 1-gigabyte chips from 512-megabyte chips to boost profit.
Inotera's Kao and Nanya Vice President P.L. Pai share the view that DRAM market will remain fair this quarter and price will likely begin rebounding in the first quarter next year.
Inotera netted NT$1.38 per share throughout the first three quarters this year, roughly in line with expectations. The result makes it the best earnings performer of all of its Taiwanese peers. Its gross margin increased to 9% in the third quarter alone from 6% a quarter earlier. Its after-tax net income for the third quarter was NT$443 million (US$13 million), or NT$0.13 per share, increasing 60% subsequently.
Nanya's gross margin turned into a black 5% in the second quarter from a red 5% in the second quarter this year. In the meantime, its loss dropped to NT$1.6 billion (US$50 million) from NT$2.8 billion (US$84 million). The company posted an after-tax net loss of NT$1.1 billion (US$36 million), or NT$0.25 per share, throughout the first half this year.
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| | ![]() | | | AUO Exhibits Full Panel Lineup at eMEX 2007
Taipei, Oct. 25, 2007 (CENS)--AU Optronics Corp. (AUO), the largest thin film transistor-liquid crystal display (TFT-LCD) panel manufacturer in Taiwan, recently demonstrated its full lineup of panel products at the just-ended 2007 Electronic Manufacturer Exposition China (eMEX) show held from Oct. 18 to 21 in Suzhou, Jiangsu Province of mainland China.
AUO's exhibit highlights included 37- to 46-inch Full HD (high definition) LCD TV panels, and 6.5- to 42-inch LCD panels for various general industrial display applications.
According to the panel maker, it was the first time it demonstrated its full-range panel products at a show, showing the firm's capability to meet diversified demands, including auto teller machine (ATM), point of sale (POS), kiosks, industrial PC, marine/aviation electronics, lottery/gambling gaming machines, medical equipment, factory automation, e-Signage, and public information displays (PID).
Currently, AUO is the world's No. 2 supplier in terms of worldwide general industrial display panel shipments. Paul Peng, vice president and general manager of AUO's information technology display business group, said that AUO's capability in a wide range of different-generation panel plants enables the firm to provide customized services in terms of product size, design, and technology support to meet customers' different needs in the industrial display market. He added that AUO would continue its efforts to develop business in the important China market.
Among the lineup of exhibits, the 12.1-inch panel for lottery machine, ATM, Kiosk, and POS applications features high contrast ratio, high brightness, long-lasting lamps, and wide temperature operations. The easily-replaceable backlight design and the reverse scan technology are also implemented. The 42-inch portrait LCD panel with AUO Advanced multi-domain vertical alignment (AMVA) technology ensures wide viewing angle and low color washout. The product is able to demonstrate good image quality in various environments and is suitable for e-Signage and PID applications at airports, stations, exhibitions, conference centers, shopping malls, department stores, amusement game centers, movie theaters or restaurants.
AUO will also exhibited 37-, 42- and 46-inch LCD TV panels equipped with Full HD resolution and AMVA technology featuring wide viewing angle, low color washout, and a high contrast ratio of 2000:1. For Desktop Monitor applications, the 24-inch wide-format Full HD panel is incorporated with AUO Simulated Pulsed Driving (ASPD) motion-blur reduction technology and HiColor technology to produce high color saturation.
As for notebook PC applications, AUO showcased light and power-saving LCDs equipped with LED backlights. The 13.3-inch LCD panel features ultra thin (thickness of 2.7mm), extra light, and a super-high contrast ratio (800:1). For small/medium sized products, the 7-inch and 8-inch panels for digital photo frame applications, and QVGA resolution (320 x 240 pixels) high-resolution panels for mobile device applications, were also on display.
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| | ![]() | | | Sprint, HTC Announce Offering of HTC Touch Full Touch-screen Wireless Phone
Taipei, Oct. 25, 2007 (CENS)--Sprint Nextel of the U.S. and HTC Corp. of Taiwan recently jointly announced that they will soon offer HTC Touch, a full touch-screen wireless phone integrating Windows Mobile 6 operating system with advanced entertainment features.
Sprint Nextel offers a comprehensive range of wireless and wire-line communications services bringing the freedom of mobility to consumers, businesses and government users; while HTC designs, manufactures and markets innovative, feature rich smartphone and personal digital assistant (PDA) phone devices.
Operating on the Sprint Mobile Broadband network, the two companies said, the stylish Touch by HTC brings together email and other essential business applications with Sprint's exclusive multimedia content, including over-the-air music downloads, live TV and more.
With a nearly 3-inch display, the HTC Touch features integrated TouchFLO technology, leveraging smooth navigation through menus with a finger swipe. In addition, the innovative TouchFLO cube brings a three-dimension (3D) cube interface allowing quick access to entertainment, communication tools and a "Dial-by-picture" photo caller ID screen.
According to HTC, the Touch exploits the broad functionality of Windows Mobile 6 with Outlook Mobile for smooth email integration, Office Mobile, Windows Live and the ability to run thousands of third-party applications. It also allows users to surf the web with Internet Explorer, send and receive emails, chat on Messenger and send files to their own web space through Windows Live. The home screen provides one-touch access to email, text messages, calendar appointments and contacts, as well as current weather conditions and forecasts for hundreds of cities around the world.
Danny Bowman, vice president of product development for Sprint, said that his company's customers appreciate the ability to have one device that seamlessly balances both personal needs and business demands. "Touch by HTC is unlike any other wireless device because it brings together the power of Windows Mobile with easy access to our entertainment applications. This attractive device easily lets you watch news as it happens, respond to email, download your favorite songs and stay connected with the office, family and friends."
Peter Chou, HTC CEO, pointed out that the Touch provides a broad range of consumers with the benefits of a smartphone with the style and ease of use they demand. The innovative device presents a new, more intuitive touch experience that simplifies access to the most commonly used smartphone features such as dialing, messaging and Web browsing, he added, and it also improves the video and music experience with the addition of Sprint TV and the Sprint Music Store.
Touch by HTC offers MicroSD card slot that supports up to 4GB memory capacity. Additional features include a 2.0 MP camera/camcorder with up to 5X zoom, advanced stereo Bluetooth and voice-activated dialing.
Touch by HTC measures 4.0- x 2.4- x 0.6-inch and weighs just 4 ounces. This device would be priced at US$249.99 with a two-year subscriber agreement and a US$100 mail-in rebate.
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| | ![]() | | | New Sino-Japan Pact Widens Sky for Chartered Flights to Japan
Taipei, Oct. 25, 2007 (CENS)--The revisions of Sino-Japan flight pact is expected to be finalize at the end of this month as the authorities of both sides are to complete the review of the revisions by then.
Chang Kuo-cheng, director general of Civil Aeronautics Administration under the Ministry of Transportation & Communications (MOTC), indicated that Japanese government has just ratified the revisions of the pact and Taiwan authority is now reviewing it. The both sides are expected to officially exchange the finalized agreement either at the end of this month or early next month.
Based on last year's revisions, UNI Airways Corp., a sister company of EVA Airways Corp., started to offer chartered flights to Japan in February of this year. And the revisions of the pact this year are believed to allow two more Taiwanese airlines, namely, Far East Air Transport Corp. and TransAsia Airways, to join the segment, which will see six Taiwan airlines fly chartered service to Japan.
Besides, the revisions this year will allow Taiwanese passenger fly to Osaka and then go onto any destination in the United States, as well as arranging regular fights to Miyasaki and Komatsu for Taiwanese airlines.
To prepare for the prospective chartered flights to Japan, Far East Air is going to lease two more Boeing 757 in mid-December of this year, which are planned fly from Taipei to Cheju of South Korea and serve as chartered planes to fly to Japan.
A sales manager at Far East Air foresaw lucrative business by flying to Japan since the country is Taiwan's second largest overseas tourism market, next only to China. The company will adopt active but flexible strategies for routes to Japan. However, TransAsia intends to take a more modest approach toward the prospective Japan-bound chartered fights.
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| | ![]() | | | Taipei Fubon Rises as Taiwan's No. 1 Syndicated Loan Lender in First 9 Months
Taipei, Oct. 25, 2007 (CENS)--Taipei Fubon Commercial Bank underwrote a total of US$3.0384 billion in syndicated loans in the first nine months of this year, making it the largest syndicated loan provider in Taiwan, according to statistics compiled by International Financial Review (IFR), a globally leading weekly financial publication.
During the period, the bank's syndicated loans showed a sharp rise of near US$1 billion or 48% from the corresponding value of US$2.1 billion of last year. As a result, the bank saw its rank jump to No. 1 from No. 3, with market share expanding to 13.5% from 9.5%.
Chinatrust Commercial Bank closely followed with syndicated loans of US$3.0117 billion in 39 cases, and Bank of Taiwan (BOT) took the third place with US$1.7757 billion. Besides, it's noteworthy that Citibank also squeezed into IFR's 'top 10' syndicated loan provider club although underwriting only four cases.
This year Taipei Fubon has underwritten syndicated loans to not only high-tech firms, but also to enterprises in traditional manufacturing, construction and financial industries. Moreover, some large syndicated loans that the bank will grant in the near future include NT$22 billion (US$666.67 million at US$1 = NT$33) to Nanya Technology Corp., NT$12.3 billion (US$372.73 million) to Carlyle Group to finance its acquisition of stakes in Ta Chong Bank, and NT$19.8 billion (US$600 million) to Acer Inc. to support its acquisition of Gateway Inc., a U.S. firm. In addition, the bank is also planning to lend NT$24.7 billion (US$748.49 million) to Advanced Semiconductor Engineering Inc., a leading semiconductor company in Taiwan.
IFR disclosed that Taiwan Broadband Communications (TBC) intends to raise funds of NT$25 billion (US$757.58 million) in the fourth quarter of the year, in the firm of a syndicated loan from ABN AMRO Bank, Citibank, Chinatrust Commercial Bank, and Societe Generale Bank.
However, Taiwan's old government-linked banks usually win more attention from Basis Point Publishing Ltd. (BP) than IFR. BP is a leading provider of Asian debt-market information and a subsidiary of Reuters. For instance, Land Bank of Taiwan boasted total underwritten syndicated loans of US$1.1 billion in the first nine months and was ranked sixth on the BP list, yet the bank was absent from IFR's 'top 10' club.
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| | ![]() | | | WiMAX Brings Boon to Taiwan's Suppliers of Network Devices
Taipei, Oct. 25, 2007 (CENS)--With worldwide interoperability for microwave access (WiMAX) technology being commercially applied, Taiwanese suppliers of network devices are benefiting from huge business potential from the technology as their customer premise equipment (CPE) is widely adopted by international large-sized makers of WiMAX-based products, according to industry sources.
At the moment, large-sized international suppliers of WiMAX-based products have worked closely with Taiwanese maker in the sector, with Alcatel-Lucent procuring CPE from ZyXEL Communications Corp. and planning to add Accton Technology Corporation, Quanta Microsystems Inc. and Acer Inc. to its supplier list, and Nortel Networks to conduct interoperability test (IOT) on the island.
Patrick Plas, chief operating officer of Alcatel-Lucent's wireless GSM/WiMAX business division, predicted that sales of wireless networks are expected to exceed euro2.5 billion, with 90% coming from WiMAX technology after 2008, when personal computers will be widely built with WiMAX functions.
So far, Alcatel-Lucent has won 15 bids for building WiMAX networks for commercial use and some 70 projects for WiMAX testing all around the world, with world's major telecom companies expected to work on large construction projects adopting WiMAX by the end of this year.
Alcatel-Lucent noted that ZyXEL is its sole CPE supplier who has passed IOT currently, and it often delivers devices for base stations coupled with ZyXEL's CPE. However, the firm will more actively add more suppliers of handheld products as network cards, receiving devices, PDA and mobile phones, as well as solicit Accton, Quanta Microsystems and Acer to be its suppliers in the future.
Meanwhile, John Hoadley, vice president of Nortel Network's 4G Business and Ecosystem Development, said that the firm has worked on over 10 construction contracts for commercial networks, with chips outsourced from Intel, Runcom and Sequent, and CPE from ZyXEL and Quanta Microsystems.
Nortel Networks has actively deployed its WiMax business operations in Taiwan, Japan, Russia, Europe, North America and Latin America. Accordingly, the firm has already attempted to carry out a series of IOT with Taiwan suppliers in the sector, including MediaTek Inc., Hon Hai Group, Accton, Gemtek Technology Co., Ltd., God Base Information Tech. Co., Ltd. and CAMEO Communications Inc.
Indeed, Taiwan's network device suppliers have benefited from a boon from WiMAX, with ZyXEL, Gemtek, Accton, Alpha Network Inc. and Microelectronics Technology Inc. and TECOM Co., Ltd. already wining orders from big global enterprises, and D-Link Corp. CAMEO, CyberTAN Technology Inc. and Quanta Microsystems actively undergoing IOT at the moment.
Institutional investors expect single-month shipment of WiMAX-based products to exceed 10,000 units next year, when business opportunities start emerging. Thus, in addition to CPE suppliers, others who specialize in developing devices for base stations will also start to reap benefits in the second half of next year.
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| | ![]() | | | Yuson Group to Ally With Major International IC Distributors
Taipei, Oct. 25, 2007 (CENS)--It is reported that Taiwan's second-largest integrated circuit (IC) distributor Yuson Group plans to join forces with the world's major counterparts, including Avnet and FUTURE, hoping to explore distribution channels in China and Vietnam, which may challenge WPG Holdings Co.'s No. 1 position in the sector on the island.
Despite recently denying such plan, Yuson emphasized that it would keep integrating operations in the sector to broaden the group's business.
Yuson already acquired a distributor Sertek Inc., affiliated with Acer Inc., early this year, effectively becoming an agent for Intel's and Taxes Instruments' products, and very likely will challenge annual sales of NT$100 billion for this year. Furthermore, if successful in allying with large international distributors, the group is expected to see its sales move up in the future.
Institutional investors projected the group's sales revenue to grow by 7% in the fourth quarter of this year, and more than 25% for next year, with net earnings of NT$4 per share.
At present, the world's top three IC distributors include U.S.'s Arrow, Avnet and Canada's FUTURE. Eyeing optimistically the huge business potential in Asia-Pacific markets, including China, India and Vietnam, major distributors from Europe and the U.S. have been eager to work with Asian counterparts to quickly explore the Chinese market.
However, Yuson already excluded Arrow as its new partner, as the latter has 4% controlling stakes in WPG. In fact, Arrow once planned to acquire 15% stakes in Yuson in 2001 but to no avail. Then Arrow turned to acquire Japan's Pioneer and hence hold stakes in WPG.
Meanwhile, Avnet has already acquired China's IC distributors SUNRISE and Taiwan's Ultra Source Technology Corp. to further explore the Chinese market.
Nevertheless, in light of pressure to combine different corporate cultures, profit-related conflicts between distributors and agents, and probable loss from signing new franchise contracts, Yuson prefers to work with large companies through holdings and strategic alliance, rather than buyouts or acquisitions.
This year, Yuson Group has seen sales in China account for more than 85% of its total sales, which have contributed 35% to the group's profits. Furthermore, the group wants to cooperate with China's Morning Star to tap the Chinese market for chips used in generic mobile phones, aiming for a 45% growth in sales next year.
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| | ![]() | | | Stock-bonus Expensing Means High Turnover for IT Companies
Many employees in Taiwan's information technology (IT) industry are thinking about changing jobs next year, when new regulations will require listed companies to count as an expense the stock bonuses they have traditionally used to attract and retain talented people. The new rules will lead to less bonuses, and thus to greatly reduced income for the industry's employees.
This is the conclusion derived from a survey conducted by 104 Job Bank on Oct. 3. Of the 1,736 respondents in the IT industry, 35% expressed a desire for a job change next year in response to the average 7% income reduction that the new rules will bring.
Under the new regulations, listed firms will have to expense their employee stock bonuses at market value beginning in the first quarter of 2008. To lessen the impact on their earnings (and consequently on their share prices), the firms will have to slash such bonuses.
The semiconductor industry's salaried employees will fare the worst, with an expected pay cut of 8.5%, followed by workers in the computer and consumer electronics industry with 7.6%, opto-electronics and optics with 7.5%, and communications and electronics components with 6.7%. Worst hit will be workers in IC design and IC components.
The higher the income the heavier the blow, according to the survey. Those with annual incomes in excess of NT$1.2 million will see their incomes tumble by 13.3%, or NT$160,000, while those earning more than NT$3 million will suffer a 50% loss. The impact on engineers and R&D personnel will be the heaviest.
Of the survey's respondents, 17.8% intend to switch to companies offering higher pay and 13.7% plan to move into industries with brighter prospects.
The affected companies, of course, hope to adopt measures that will soften the impact of the new rules on the income of their employees. More than half of them plan to substitute cash for stock bonuses, 15.6% to change to stock options, and 5.2% to hike wages. | |
| | ![]() | | | Taiwan's CMO to Acquire 7.68% of World's No. 1 Monitor Maker
By QUINCY LIANG
Chi Mei Optoelectronics Corp. (CMO), the second-largest thin film transistor-liquid crystal display (TFT-LCD) panel manufacturer in Taiwan, recently announced that it would acquire a 7.68% stake in TPV Technology Ltd., the world's largest contract monitor producer, for NT$3.4 billion (US$103.03 million at US$1: NT$33), according to industry sources.
A memorandum of understanding for the stock purchase was signed by the two companies on Sept. 27. If everything goes smoothly, CMO will become the third-largest shareholder in TPV, trailing Royal Philips Electronics of the Netherlands and Great Wall Computer Software & Systems Inc. of mainland China.
According to the newspaper report, CMO expects its investment in TPV to achieve a win-win status, allowing CMO to make better use of TPV's world-class monitor manufacturing capability while giving TPV access to an ample and stable supply of panels.
Foreign institutional investors expressed varied opinions on the cooperation project. Some figured that the tie-up could further strengthen the partnership between the system maker and panel supplier, but others said that CMO's plan to pay an 8% premium for TPV's shares was not necessarily feasible in an economic sense.
CMO chairman Frank Liao noted that TPV produces tens of millions of monitors and LCD TVs per year, making it a very good "outlet" for absorbing CMO's panel capacity.
Eddie Chen, CMO's chief financial officer, stressed that there are still many details of the share transaction yet to be finalized. Basically, he said, CMO will not get a seat on TPV's board of directors, nor will it become involved in the operation of the company.
According to the reported plan, TPV will carry out a capital increase soon; as part of that project, CMO will acquire 150.5 million new TPV shares for 5.39 Hong Kong dollars (HKD) each share, accounting for 7.68% of TPV's issued capitalization. Currently, Philips owns 13.5% of TPV, while Great Wall holds 10%.
A local TFT-LCD manufacturer mused that the TPV-CMO tie-up once again proves the importance of integration between system makers and panel suppliers. More importantly, the manufacturer added, the cooperation project implies that the supply shortage of TFT-LCD panels is expected to continue into 2008. Currently, he explained, TPV ships about 50 million monitors per year and CMO's joining it as a strategic investor can stabilize its future supply of panels.
In addition, the manufacturer said, TPV and CMO's closer tie-up is also expected to improve TPV's low net profit margin, which was only 2.3% in the second quarter of 2007.
The source added that for CMO, which is in a relative advantageous position thanks to the global tightness in panel supplies, now is a good time to invest strategically in preparation for a time when the business climate becomes less favorable.
The Innolux Effect
The so-called Innolux business model—that of an integrated TFT-LCD and system product maker--has been working successfully and imposing a certain pressure on both panel suppliers and system makers. This model has also driven local panel suppliers to carry out vertical integration more actively.
TPV never deigns to deny that the Innolux model has brought increasing price pressure upon it, and stresses that one of its major operating cores in the future will be vertical integration aimed at upgrading profitability. Although its shipments of monitors and LCD TVs have been rising, TPV has been suffering declining profit margins; in the second quarter of this year, the net margin was only 2.3%.
TPV has been trying to escape from the trap of disappearing margins. In the past few years it has cooperated with the HannStar Display Corp., Taiwan's fourth-largest TFT-LCD panel supplier, and Chunghwa Picture Tubes, (CPT), the third largest, in setting up rear-section LCD module (LCM) plants in mainland China. Last year TPV also set up a new LCM plant near Ningbo in Jiangsu Province, and strengthened its cooperation with CMO.
Also, reportedly, TPV tried to forge cooperative ties with AU Optronics (AUO), Taiwan's leading panel supplier, but finally pulled out due to AUO's close partnership with Qisda Corp. (formerly BenQ Corp.).
Local panel suppliers have also been looking for partners to strengthen their competitiveness. CPT has tied up with the Xiamen Overseas Chinese Electronic Co. (Xoceco) of China and the Hong Kong-based Proview Electronics Co. And the LG.Philips LCD Co. (LPL) of South Korea reportedly has been trying to connect up with TPV, Flextronics, and others to take over shares that Philips wants to shed.
Industry insiders said that CMO rushed to finalize its investment in TPV because it was worried about being marginalized by the LPL's move.
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