Business News

Baidu Plans Operating System for Mobiles

2011-03-24T01:08:00.002-03:00

Financial Times - 23/03/11

Baidu plans operating system for mobiles
By Lionel Barber and Kathrin Hille in Beijing

Published: March 22 2011 22:08 | Last updated: March 22 2011 22:08

Baidu plans to develop a light operating system for mobile devices, its chief executive has indicated, a strategy in which China’s leading internet search company would once again follow Google.

Over the coming three to five years, the company aimed to create software which offered use of a web search box within a second of starting their smartphone or tablet computer, Robin Li told the Financial Times.

“In order for an operating system to work, it needs to [do a lot of processing], but if we make it just about a search box, then the task will be much simpler.

“Right now when you power on an iPhone, it takes 45 seconds before you can do anything. In the future, one second, you turn on the device, and you can start using the box. That’s our mission for the future of the internet,” he said.

Mr Li’s remarks offer the clearest explanation yet of a strategy he calls “box computing”, and indicate that its ultimate result could resemble Chrome OS, the light operating system Google has developed.

That system, announced in July 2009, is aimed at consumers who mainly use their computers or phones to access the internet. A web browser and a media player are the system’s only applications.

Western observers have often criticised Chinese internet companies as mere clones of their western peers, especially as Beijing’s strict internet censorship system has kept many US internet groups out of the world’s most populous internet market and proved challenging to those who have tried to come in.

Google relocated its China web search service from its mainland website to its Hong Kong website a year ago arguing that it could no longer put up with growing censorship demands from Chinese authorities. The US company’s share of China’s web search market by revenue has since dropped to 19.6 per cent, while Baidu’s market share has risen to more than 75 per cent, according to Analysys, the internet research firm.

Mr Li has long said he wanted to transform the search box, the frame where internet users can enter the phrase they want to search for, into a universal computing tool that could replace all other interfaces. “The goal is to let people become increasingly dependent on the Baidu box,” he said.

Mr Li said Baidu intended to first develop a wide range of new uses for the box before launching the basic system. “When the box is capable of doing all those things, we then will make sure that people can get the box within one second after the power-up of the device,” he said.

Mr Li added that new internet trends such as online video and social media could challenge the dominance of search. “They may not have a direct competitive relationship with search, but at the end of the day, it’s media time. If users spend a lot of time on A, then naturally they’ll spend less time on B.”

Lenovo, NEC Enter Talks On PC Tie-Up

2011-01-24T00:04:00.001-02:00

The Wall Street Journal - 24/01/11

TOKYO—Hoping to put another notch in its belt after its high-profile 2004 purchase of International Business Machines Corp.'s personl-computer operations, China's Lenovo Group Ltd. is in talks with Japan's NEC Corp. over what could be a large-scale tie-up, a person familiar with the matter said Friday.

While the person didn't specify what type of tie the two companies are discussing, any alliance would come as the companies' PC businesses are heading in different directions. NEC's once-substantial share of the global market has shrunk to insignificance, while Lenovo is an up-and-coming challenger, albeit with little presence in Japan.

"We do not comment on rumors or speculation," a Lenovo spokeswoman said.

Lenovo held about 8% of the global PC market by units in 2009, according to research firm IDC, putting the computer maker in fourth place behind Hewlett-Packard Co., Dell Inc. and Acer Inc. NEC's once-flagship PC business was in 12th place with a 0.9% share—down from 11% in 1995, before fierce price competition from newcomers in Asia upended the market.

NEC does maintain a solid customer base in Japan, however, where it remains a leader in PCs with 18% of the market in 2009.

NEC laptops for sale in Japan, where it is still a major player in PCs.
For NEC, a partnership with Lenovo would be a major step in its effort to realign operations and concentrate more investment on key areas in its information and communication businesses, such as cloud computing and next-generation telecommunications infrastructure.

As part of that effort, NEC last year merged its mobile-phone handset business with those of Hitachi Ltd. and Casio Computer Co. to create a single cellphone company. Also last year, its NEC Electronics semiconductor unit merged with Japanese chip maker Renesas Technology to form Renesas Electronics Corp. NEC, which had a majority stake in NEC Electronics, owns 34% stake of the new entity.

A partnership with Lenovo would spur hopes that the Japanese company could take advantage of Lenovo's client base in China to expand its information-technology services there, said Mizuho Investors Securities analyst Yuichi Ishida.

The Nikkei newspaper reported Friday that NEC is in the final stages of talks with Lenovo to join forces in the PC business by setting up a joint venture, and that Lenovo is likely to take a majority stake in it. The newspaper also said they are looking to work together on parts procurement and sales.

Investors warmly received reports of the tie-up. NEC's shares rose 2.1% to 244 yen ($2.95) in trading on the Tokyo Stock Exchange Friday. Lenovo shares fell 0.6% to 4.69 Hong Kong dollars (60 U.S. cents) on the Hong Kong Stock Exchange.

NEC said its PC business is profitable, but doesn't disclose figures. It forecast that revenue for the segment that includes PCs will rise 4.1% to 474 billion yen ($5.72 billion) in the fiscal year ending in March. That would represent about 14% of the company's 3.3 trillion yen forecast for group revenue.

Notebook OEM Makers Look Likely To Hike Prices

2011-01-12T07:04:00.001-02:00

The China Post - 12/01/11

Notebook OEM costs are likely to rise during the first half this year, according to a Compal Electronics spokesperson in response to speculation that notebook OEM giant Quanta Computer Inc. has worked out a plan to hike its costs in the notebook computer production chain. The rising commodity prices, strong New Taiwan dollar and labor costs have increased margin pressure for component makers in the notebook manufacturing chain. Quanta's recent decision was only the tip of the iceberg and price hikes are almost certain during the first half of this year, according to Compal. Makers of component like PCB, shell, connectors, heat dispenser modules, power supply modules, etc. started the push to increase their margins last year, and some may have already upped the costs during before last year finished. Widespread hikes among parts makers this year are thus not a surprise, Compal spokesperson said.

The OEM price hike is expected to offset roughly 70 to 80 percent of the rise in production cost, according to international market analysts, and should help improve the bottom line for OEMs like Quanta.

HP was said to be the first notebook brand name to accept price hikes requested by its OEMs, a concession that would likely to include not just Quanta but also Honhai Precision and Inventec as beneficiaries. Compal, in response to the latest speculation also indicated that it would up prices as early as the first half of this year.

Pegatron Corp. was not silent either. The company also followed up with statement that it would also realign its pricing structure in line with the new cost expectations, says the company.

Dell Acquires 'Cloud' Computing Services Firm

2010-11-05T07:44:00.000-02:00

The China Post - 04/11/10

NEW YORK -- U.S. computer giant Dell announced Tuesday that it has acquired Boomi, a company that provides Web-based or “cloud” computing services. Financial details of the transaction were not disclosed.

The Texas-based Dell said the purchase of Berwyn, Pennsylvania-based Boomi will allow it to “help businesses reap the full value of cloud computing,” where software or services are hosted on the Web and available on demand.

Boomi operates a platform that allows transfers of data between cloud-based applications and “on-premise” computer networks.

Dell said Boomi “manages millions of transactions a month and has completed tens of thousands of cloud integrations for hundreds of customers globally across a wide spectrum of industries.”

Dell said the acquisition is its latest bid to “build a technology portfolio for growing businesses seeking the benefits of Web-based computing.”

“Twenty-six years ago we helped accelerate the move to client-server computing; today we'll help drive a similar transformation with customers turning to the cloud to drive costs down and innovation up,” said Steve Felice, president of Dell's consumer, small and medium business division.

Dell in September lost out to rival U.S. computer giant Hewlett-Packard in a bidding war for data storage company 3PAR, whose technology enables large companies and government agencies to shift to “cloud” storage platforms.

IBM To Announce Cloud Initiatives To Government Clients

2010-11-03T04:19:00.002-02:00

The Wall Steet Journal - 31/10/10

SAN FRANCISCO (Dow Jones)--International Business Machines Corp. (IBM) plans to announce on Monday two community-based cloud initiatives for both federal and municipal governments, a move that underscores the spread of shared cloud computing.

IBM's Federal Community Cloud will offer a shared IT infrastructure to government users only. The product, which will allow government agencies to run programs and access data, will be sold for a monthly subscription fee.

Separately, IBM will unveil its Municipal Shared Services Cloud, a pilot project will offer local governments software-as-a-service through mid-2011. After evaluating the program, IBM may begin selling the product as a service, said David Cohn, who's running the government cloud project.

Several cities in New York and Michigan are already signed up for the municipal pilot program. Independent software companies will be allowed to offer their products on the platform, Cohn said.

The two announcements comes as cloud computing, a broad term for the use of applications and data over the Internet, gains importance in commercial and government sectors. They also mark a potential shift in the government's use of cloud computing, which has been limited to private clouds because the government has different security standards than most businesses.

American government agencies are largely unable to use public cloud services, which house data and applications for multiple tenants, due to security concerns.

Community clouds reserved for government users promise the cost savings of a public cloud while delivering the security required for government use, said David McQueeney, the chief technology officer of IBM's federal government unit.

The market opportunity for IBM and its competitors for government clients--including the likes of Microsoft Corp. (MSFT), Google Inc. (GOOG) and Amazon.com Inc. (AMZN)--promises to be large. A recent study by Market Research Media Ltd. forecasts that U.S. government spending on cloud computing will grow at a compound annual growth rate of about 40% over the next several years, reaching a market value of $7 billion by 2015.

"It's an attractive, high-growth area," McQueeney said.

Two customers have already signed up to use IBM's Federal Community Cloud, McQueeney added. The service will be available as soon as IBM receives government certification under the Federal Information Security Management Act, a security standard that all government IT contractors must meet. Certification is expected shortly, McQueeney said.

Chimei Innolux Incurs Losses in Third Quarter

2010-11-02T05:40:00.001-02:00

The China Post - 02/11/10

Chimei Innolux incurs losses of NT$3.64 billion in third quarter
TAIPEI -- Flat panel maker Chimei Innolux Corp. said yesterday it suffered a net loss in the third quarter as a result of falling product prices and foreign exchange losses. Chimei Innolux posted NT$3.64 billion in net losses, with a loss per share of NT$0.8, while its gross margin stood at 1.3 percent.

The company said it recorded NT$1 billion in foreign exchange losses as the New Taiwan dollar continued to strengthen against the U.S. dollar.

“The low gross margin largely reflected the decline in product prices, in particular the prices of monitors used in desktop computers,” Taiwan International Securities analyst Eric Yu said.

According to Yu, monitors accounted for about 36 percent of Chimei Innolux's total sales of NT$137 billion for the third quarter, while the ratio at rival AU Optronics was just at 13 percent during the same period.

“That's why Chimei Innolux shouldered higher pressure from product price falls than AU Optronics,” Yu said.

Under similarly unfavorable market conditions, AU Optronics posted NT$227 million in net profits, down 98 percent from NT$11.25 billion recorded a quarter earlier, with a gross margin of 5 percent.

Yu said flat panel inventories in global markets remain at high levels, and it will need more time before product prices stabilize.

Yu said the market is watching closely how sales are during the upcoming Christmas season in North America, where weakening demand has offset a recovery in sales in the China market.

“I am afraid Chimei Innolux will continue to incur losses in the fourth quarter, and its gross margin will be further squeezed on the current high inventories,” Yu said.

TPV Capitalizes On Renewed Demand

2010-09-08T03:04:00.001-03:00

Tha Wall Street Journal - 08/09/10

TPV Technology Ltd., a Taiwan-based contract maker of flat-screen monitors and televisions, is benefiting from a recovery in consumer demand as the global economy rebounds from the 2008 financial crisis. The Hong Kong-listed company, which counts Sony Corp. and Dell Inc. as customers, has seen a rise in orders as more companies outsource production to cut costs.

Benefiting from a rise in orders, TPV posted a 47% increase in first-half net profit to US$80.3 million. TPV has been keen on cementing partnerships with key suppliers to strengthen its competitiveness in the flat-screen manufacturing industry. TPV this year formed a TV joint venture with Taiwanese panel maker AU Optronics Corp. in Poland and in November 20009 it formed a joint venture with South Korean liquid-crystal-display maker LG Display Co. to produce TVs and PC monitors in China.

Despite concerns about the global economy slowing, TPV Chairman and Chief Executive Jason Hsuan is upbeat about industry growth prospects because of rising outsourcing orders from TV makers and the uptake of new products such as three-dimensional TVs and light-emitting-diode backlit liquid-crystal-display TVs.

Mr. Hsuan, born in the Fujian province of China, joined TPV in 1990. He previously served in managerial positions at General Electric Co. and PepsiCo.

He recently sat down with Lorraine Luk to discuss the company's growth strategy, outlook for the market and industry trends. Edited excerpts:

WSJ: TV inventories have been rising in China. What's your view on demand in mainland China, as well as the U.S. and European markets?

Mr. Hsuan: I expect 80% of TV brands can clear their inventories in China by the end of September. Orders during the September-October holidays in China will be very important. I won't be surprised to see China overtaking the U.S. market as the world's largest TV market by shipments in 2011.

For sure, China will be the largest TV market in 2012. Despite the European debt crisis, we haven't seen a significant inventory problem in Europe. Digitalization of broadcasting in Western Europe and Christmas holiday purchases will drive sales in the U.S. and European markets for the rest of the year.

We will increase our effort in emerging markets such as Latin America, Russia and Eastern Europe. In fact, we are studying the feasibility of setting up a production facility in Russia. We see big growth potential in Russia. It could be the next China.

WSJ: Are you looking at any more partnerships to stay competitive?

Mr. Hsuan: We have established quite a lot of joint ventures with our panel suppliers such as LG Display and AU Optronics to lower costs and ensure a stable supply of panels. Our all-in-one PC joint venture with [Taiwan-based notebook computer maker] Inventec Corp. will take one to two years to bear fruit. We need to scale up the operations first.

WSJ: What are some of the products you are betting on in the future?

Mr. Hsuan: TPV has high hopes on LED products. I expect the uptake of this power-saving and environmental-friendly component to increase quickly in the coming few years and it will drive our earnings next year.

I expect 80% of our monitor shipment next year will have LED backlights, up significantly from 20% this year. The proportion of LED backlit-TVs will account for 50%-60% of our total TV shipments next year from 5%-10% in 2010.

To prepare ourselves for an anticipated surge in [light-emitting diode] demand, we have formed a JV with LED makers Everlight Electronics and Epistar Corp. The JV is expected to start shipping LED products in the fourth quarter. Now, we are looking into forming more joint ventures with key component makers in plastics and metals.

WSJ: What about new products like your 'all-in-one' personal computers, which integrate a monitor and computer hardware?

Mr. Hsuan: All-in-one computers is one of the up-and-coming products. It will help to improve our gross margin as the average selling price of all-in-one PCs is four times to five times higher than PC monitors. The price of all-in-one computers is still 20%-30% higher than traditional desktop PCs.

WSJ: What's your view on the company's outlook for the rest of this year?

Mr. Hsuan: We shipped 26.4 million PC monitors and 6.3 million LCD TVs in the first six months of this year. We will ship more in the second half. Our second-half revenue will be higher than the record high first-half revenue of US$5.45 billion. [The full year] could be a record year in terms of revenue.

Our customers are major PC makers such as Hewlett Packard, Dell, Lenovo and Acer which sell 85%-90% of the world's computers. We are also tapping into the rising LCD TV outsourcing market. Our first-half LCD TV shipments almost doubled from a year earlier, which raised our global market share in the LCD TV market to 7.6% from 6.6% in 2009. We are confident of growing both our revenue and shipment next year. No matter how sluggish the economy is, customers are still willing to spend on a better display.

WSJ: Which areas will drive growth for TPV in the future? What are your investment plans?

Mr. Hsuan: We have a five-year plan for our business. Our total shipments of monitor, TV and all-in-one PC will exceed 70 million units [this year]. Our five-year target is to ship more than 100 million units of display products [per year] by 2014 or 2015.

TV is the business that we will continue to invest in. Our capacity for TVs will continue to grow in the next four-five years and it will reach 40 million units by 2014, up from 28.5 million units this year. Our goal is to grow our market share in the LCD TV market to 15% by 2015 from 7.6% in the six months ended June 30 because TPV is set to benefit from more outsourcing by the world's top-tier TV brands.

WSJ: What is your capital spending budget for this year, and are you planning an increase next year?

Mr. Hsuan: We are planning US$200 million in capital spending this year. Capex for next year is likely to be similar to this year.

LCD-Panel Prices Falling

2010-09-08T02:53:00.002-03:00

The Wall Street Journal - 08/09/10

HONG KONG—Signs of a sluggish back-to-school season for consumer electronics in the U.S. and weak demand in Europe have hit prices of liquid-crystal-display panels sharply, and some Asian makers of the components are forecasting continued weakness this year.

Weaker prices are starting to hurt margins at Asia's LCD makers, including AU Optronics Corp.
Manufacturers of LCDs—which are used in a variety of devices including computers, tablets and televisions—boosted output from last year, anticipating stronger demand for flat-screen TVs ahead of the World Cup soccer tournament. But the industry is now faced with excess panel supply as retail inventories rise because of a slowdown in consumer purchases amid global economic uncertainty.

To make matters worse, recent data suggest sales during this typically strong season in the U.S., the biggest market for flat-screen TVs, are suffering amid a slower-than-expected economic recovery. An index of U.S. consumer confidence released this week by the Conference Board, a private research group, improved only modestly in August, rising 2.5 points to 53.5.

Researcher iSuppli noted LCD TV retail inventories stood at six to nine weeks on average in July, which is on the high side.

"The real problem is TV [sales] in major markets such as the U.S. is very weak. This is much worse than what panel makers expected," said Peter Yu, an analyst at BNP Paribas in Seoul.

The weaker-than-usual prices are starting to hit margins at Asia's LCD makers, including LG Display Co., AU Optronics Corp., Samsung Electronics Co. and Sharp Corp.

The companies are bracing for weaker earnings and are considering adjusting their production levels to cope.

Capital spending this year by LCD makers is expected to reach $16.9 billion this year, up 43% from $11.8 billion in 2009. Analysts say production cuts are needed for the industry to digest excess inventories.

"The increase [in capital spending] has put LCD-panel production in overdrive, contributing to an excess in panel supply," said iSuppli analyst Sweta Dash.

According to WitsView Technology Corp., a Taiwan-based market researcher, prices for panels used in computer monitors have fallen about 15% since July, while TV-panel prices have fallen about 10%. Lower panel prices hurt LCD makers, but they are typically good news for set makers looking to lower overall component costs. If prices fall sharply, set makers are able to transfer the lower costs to consumers.

"LCD panel demand is being affected by weak consumer spending world-wide for TV sets and higher inventories," said Chang-Man Kim, vice president of LCD marketing at Samsung, the world's biggest maker of LCD panels by revenue. "With supply increasing, some companies have begun to lower their factory utilization rates."

Samsung declined to comment on its factory-utilization rate, but noted that it will be flexible in its LCD production, hinting that if market conditions turn worse, it is prepared to cut production.

Nam Hyung Kim, an analyst at Arete, said Taiwanese LCD companies' factory-utilization rates are down to about 80% to 85% currently, while Korean LCD makers' utilization rate is around 90% to 95%.

Sharp, maker of panels as well as Aquos-brand LCD TVs, said it expects LCD panel prices to continue to fall as it sees uncertainty in the market. The company declined to comment on potential production cuts, saying only that its LCD plants are running near or at full capacity.

"The economic crisis in Europe has pushed the increasing glut of panels and the decline of panel prices in the market," said Sharp spokeswoman Miyuki Nakayama. "We see greater uncertainties of panel demand in the second half of this year."

Samsung had forecast that its average selling LCD panel prices are likely to remain flat in the third quarter compared to the second quarter, but there is potential for a high-single-digit percentage decline for various models, following a midsingle digit percentage increase in average selling prices in the second quarter.

"Monitor panel demand may weaken in the third quarter, mainly due to the increase in desktop replacement to laptop. Market conditions may shift from strong to flat, or weak, as demand growth slows down and panel supply increases," said Yeongduk Cho, vice president for Samsung's LCD business, during an earnings conference call in July.

Taiwan-based AU Optronics declined to comment about its production levels or the market outlook, while LG Display officials didn't immediately respond to a request for comment.

ChiMei Forecasts Price Decline in Q3

2010-08-10T08:42:00.003-03:00

The China Post - 10/08/10

TAIPEI, Taiwan -- Chi Mei Innolux Corp., a leading Taiwan flat panel manufacturer, yesterday forecasted a decline in panel prices for the third quarter and expressed its hope the market will pick up in September. The company made the statement during its investors' conference yesterday via conference call, hosted by various high-ranking officials.

“Based on our observation, demand for flat panels will mostly be unchanged in Q3,” said Tuan Hsing-chien, CEO of Chi Mei Innolux. “Yet supply is expected to increase.”

The result will be a quarter-over-quarter decline in panel prices by about 10 percent during the third quarter, Tuan said.

“The average selling price has declined by over 5 percent in July and August alone, and we hope prices will stabilize and bottom out in September,” he said.

Hsu Ting-chen, vice president of Chi Mei Innolux, said that shipments will also play a critical role in determining prices in the third quarter.

He said that given LCD monitors and TVs backlit by light-emitting diodes (LED) are more expensive, Increased shipments will give prices a boost.

Tuan, meanwhile, said by the end of the year, the firm's generation-8.5 fabs will use 24,000 glass substrates each month to produce panels. The number will go up to 58,000 by the third quarter of next year, he said.

The company's capital expenditure for the year will be between NT$80 billion and NT$100 billion to be used for expansion at the firm's Gen 6 and Gen 8.5 fabs, he said.

Chi Mei Innolux also reported its second quarter results yesterday. It posted combined sales of NT$144.629 billion, a rise of 113 percent from the first quarter.

Gross profit margin was 12.8 percent for the second quarter, higher than the 10.3 percent for the first. Net profit was NT$9.54 billion, translating into earnings per share of NT$1.43.

Hon Hai To Make More Laptops For Dell

2010-07-06T01:55:00.001-03:00

The China Post - 06/07/10

Hon Hai Precision Industry will reportedly get more orders from Dell to make notebook PCs, marking an important step in its effort to become a major laptop contract manufacturer, reported the local Economic Daily News yesterday. Dell will ask Hon Hai to make 5 million notebooks next year, more than quadrupling the 1 million Hon Hai makes for Dell now, the paper reported, citing unidentified members from the notebook supply chain.

Wistron and Compal, however, will continue to be Dell's largest contract manufacturers, which are expected to make 10 million and 8 to 9 million notebooks for Dell next year, respectively. The figures are about the same as this year, at 9 to 10 million for Wistron and 8 million for Compal.

Although Hon Hai will be making less notebooks compared to its peers, the increase in orders will still be a milestone for the electronics manufacturer in its effort to cement closer ties with multinational PC brands, the paper reported, citing analysts.

Analysts pointed out Hon Hai's winning of more orders will mean two things: gross profit margins for making laptops will be squeezed further, and business of Hon Hai's components units will get a lift.

Hon Hai's increasing time-to-market capabilities have caused unease and anxiety among its competitors, the paper reported.

It cited Chen Jui-tsung, president of Compal, as suggesting that Hon Hai's laptop market share next year will increase by 8 to 10 percent, translating into shipments of 20 million based on a total of 250 million notebook PCs in the global market.

Innolux Overtakes Rival AU Optronics

2009-11-16T03:15:00.001-02:00

The Wall Street Journal - 16/11/09

TAIPEI—Computer-monitor maker Innolux Display Corp. agreed to acquire Chi Mei Optoelectronics Corp. in a 172 billion New Taiwan dollar ($5.3 billion) all-stock deal that extends the reach of Taiwanese technology manufacturing tycoon Terry Gou.

The purchase of Chi Mei, announced Saturday, marks the second acquisition in less than two months for Innolux, which leads the world in shipments of flat-panel computer monitors. The deal, a 26% premium to Chi Mei's market value based on Friday's closing prices, reflects intensifying competition among Asia's major producers of liquid-crystal-display panels used in TV sets and flat-screen monitors. The rivalry is especially heated among Taiwanese and South Korean companies, which are scrambling to increase their share in the rapidly growing Chinese market.

Innolux was founded six years ago by Mr. Gou, who also is founder and chairman of Taiwan-based Hon Hai Precision Industry Co., the world's biggest contract manufacturer by revenue. Mr. Gou is the largest single shareholder in Innolux, and he, Hon Hai and other related interests together own about 24% of the display maker. Hon Hai, which uses the trade name Foxconn, started out making knobs for black-and-white TV sets but has steadily expanded into a broad range of electronics including personal computers, videogame consoles and cellular phones.

"We want to be Taiwan's No. 1 [flat-panel] player…and to be among the world's top three panel makers," Mr. Gou told reporters Saturday.

The LCD-panel industry has been beset by overcapacity as producers have poured cash into ever-larger factories that can bring costs down. The upshot is that even amid soaring demand for LCD television and computer monitors, producers have struggled to remain profitable.

The new entity, to be named Chi Mei Innolux Corp., will overtake AU Optronics Corp. as Taiwan's biggest maker of LCD panels by capacity and rank it among the world's three biggest LCD producers, company officials said. Samsung Electronics Co. and LG Display Co., both of South Korea, now lead the industry.

"The combined entity will have the scale to compete toe-to-toe with the Koreans," said Matt Cleary, an analyst at Deutsche Securities. He said Innolux has a relatively high rate of capacity utilization at its factories, a key factor in profitability, which should help the combined company maintain a healthy overall utilization rate during downturns.

Mr. Cleary said consolidation should prove positive for the global flat-panel industry as fewer producers competing for clients will help support panel prices.

The Chi Mei tie-up follows Innolux's Oct. 5 announcement that it would buy TPO Displays Corp., a producer of flat panels used in gadgets like cellphones, in a share swap valued at $620 million. Chi Mei specializes in larger panels used for TV sets and monitors.

"It's not going to be easy for Innolux to integrate two takeovers simultaneously, but the overall product portfolio gives it a competitive product mix in everything from TVs to handsets," Mr. Cleary said.

Acer Denies Plan To Establish Notebook Manufacturing Plant In Brazil

2009-10-12T02:06:00.001-03:00

The China Post - 12/10/09

TAIPEI, Taiwan -- Taiwan's computer giant Acer Inc. yesterday denied a press report which said it planned to open a notebook personal computer plant in Brazil. “The company has no information on that. Personally, I think it is unlikely, “Acer spokesman Wang Tao-hsiung said. “It is totally unlikely that Acer plans to build a notebook PC plant in Brazil. If you say it is a desktop PC plant, that could be remotely likely, even though that is not being planned either,” he said.

Wang was responding to Saturday's report in Brazilian newspaper Folha de Sao Paulo, which said that Acer, after withdrawing from Brazil for 15 years, plans to return to local market and open a notebook PC plant. The state reason was that currently Acer ships its notebook PC and the smaller netbook PC to Brazil via Paraguay and sells them at low price in Brazil, which has made its computers popular in Brazil.

However, Brazil has cut tariffs on information products and is offering incentives to retailers, which has made Acer's transshipment through Paraguay unnecessary, Folha said.

Established in 1976, Acer reported 2007 revenues of US$14 billion. It has a worldwide staff of 5,000 employees.

In 2007, Acer overtook Dell and became the world's No. 2 notebook computer vendor after buying U.S. computer maker Gateway in October of that year.The purchase also helped Acer overtake Lenovo as the third-biggest personal computer maker in the world. Acer hopes to overtake HP as the world's leading laptop seller by 2011.

LCD, Chipmakers May Open To China

2009-09-30T05:28:00.001-03:00

The China Post - 30/09/09

TAIPEI, Taiwan -- Taiwan is considering allowing Chinese investors to buy stakes in its flat panel and chip companies, Hsien-lin Huang, an official at the island's Ministry of Economic Affairs, said. Taiwan is also evaluating a plan to let local liquid- crystal display and semiconductor companies set up plants in China and buy stakes in mainland businesses, Huang said in a phone interview today.

“In view of the global trend and competition, we are mulling ties with China in our flat panel and semiconductor companies,” said Huang, declining to give a time frame on when a decision will be made.

Taiwan will discuss the possibility of letting Chinese investors take stakes in flat-panel and semiconductor companies by the end of the year, the Commercial Times said today, citing Economics Affairs Minister Shih Yen-shiang.

On Sept. 16, Shih said the government will review plans to further ease curbs on Chinese investments to the island. Taiwan said in June it will allow investments from mainland China in 100 industries and projects, excluding the semiconductor, liquid-crystal display and telecommunications industries.

Building Plants

Samsung Electronics Co., LG Display Co. and Sharp Corp. have said they're planning or considering building plants in China. Taiwan companies including Hon Hai Precision Industry Co. and Quanta Computer Inc. manufacture computers on the mainland.

AU Optronics Corp., Taiwan's largest liquid-crystal display maker, said Sept 3. it held talks with local governments in China about building factories in the country.

United Microelectronics Corp., the world's second-largest contract manufacturer of chips, said April 29 it plans to buy the 85 percent stake in He Jian Technology (Suzhou) Co. it doesn't already own for as much as $285 million. The deal must get Taiwan regulatory approval.

AU Optronics gained 2.4 percent on the Taiwan Stock Exchange as of 10:04 a.m., while United Micro advanced 3.6 percent and bigger rival Taiwan Semiconductor Manufacturing Co. jumped 3.3 percent. The benchmark Taiex index added 1.5 percent. Relations between China and Taiwan have warmed after Taiwan President Ma Ying-jeou took office in May last year and abandoned his predecessor's pro-independence stance. The island's benchmark stock index has gained 61 percent this year on optimism that closer ties will bolster economic growth.

Hon Hai is Developing ARM-Based Laptops

2009-09-08T23:46:00.001-03:00

The China Post - 09/09/09

TAIPEI, Taiwan -- Hon Hai Precision Industry Co., the world's largest contract maker of electronics, is developing as many as five models of notebook personal computers using semiconductors designed with ARM Holdings Plc.'s technology. “We've heard requests from the telcos” for laptops costing less than US$200, Young Liu, special assistant to Hon Hai's chief executive officer, said in Taipei yesterday, without naming the customers. Chinese phone operators are amongst those seeking cheaper laptops which will use a Hon Hai-developed version of the Linux operating system. The products may be released next year, Liu said.

Hon Hai earlier gained 3.6 percent to close at NT$128 in Taipei trading, the highest since Aug. 27, 2008. The shares have more than doubled this year, compared with a 59 percent advance by the benchmark TAIEX index.

Elpida Might Increase Chip Prices 50%

2009-04-23T09:14:00.002-03:00

The China Post - 23/04/09

TOKYO -- Elpida Memory Inc., Japan's largest maker of computer-memory chips, said it plans to raise prices as much as 50 percent next month after industry-wide production cuts eased a glut that drove chipmakers to record losses. "The left-over inventory at personal-computer and module makers that was skewing the demand-supply balance is finally gone," President Yukio Sakamoto, 61, said in an interview yesterday at Elpida's head office in Tokyo. The company plans to charge customers about $1.50 per gigabit of memory starting next month for selling prices to cover production costs, he said.

Elpida jumped 15 percent and led Asian semiconductor stocks higher as price gains may help the industry recover from a glut that forced Germany's Qimonda AG to seek bankruptcy protection. Computer-memory-chip makers may remove excess supply this quarter after they slashed capital spending 58 percent last year, according to Barclays Capital.

"The production cut among chipmakers has helped reduce the inventory level," said Robert Chuang, who helps manage $700 million at HSBC Asset Management Ltd. in Taipei. "However chipmakers also face the challenge of whether computer makers will accept the price increases."

Elpida and other producers of the dynamic random access memory will probably cut capital expenditure 64 percent to $3.35 billion in 2009, Barclays Capital said April 16. DRAM makers lost a record $12.5 billion from 2007 until the end of 2008, according to Andrew Norwood, an analyst in London at Gartner Inc., an industry researcher.

Shares Rise

Elpida climbed to a six-month closing high of 1,250 yen on the Tokyo Stock Exchange after Sakamoto said he plans to raise prices and the Nikkei Newspaper reported the company may obtain government funds.

Samsung Electronics Co., the world's largest maker of DRAM chips, gained 3.1 percent in Seoul and Hynix Semiconductor Inc., the second biggest, advanced 15 percent. Taiwan's five publicly traded makers of DRAM chips, which temporarily hold data to help computers run multiple programs simultaneously, rose in Taipei.

Semiconductor makers have boosted prices of the 1-gigabit model by 16 percent to 94 cents from record lows in December, according to Taipei-based Dramexchange Technology Inc., which tracks computer-memory contract prices twice a month. That has helped shares of Elpida and Hynix more than double this year.

'A Bit Skeptical'

Robyn Hsu, a fund manager at Capital Investment Trust Corp. in Taipei, isn't convinced Elpida will succeed. In March 2008, Sakamoto said the company planned to raise prices 20 percent the following month. The chipmaker then said on April 25 that customers had accepted an increase of about 10 percent.

"I am a bit skeptical since Elpida has a record of failing to raise prices in the past," said Hsu, who helps manage $3 billion in funds. "It would be great if it can raise prices by that much."

Sakamoto's planned price increase is "probably overly enthusiastic," Credit Suisse Group AG said in report today.

Nanya Technology Corp., Taiwan's second-largest DRAM maker, said last week it was in talks with customers including Hewlett- Packard Co. and Dell Inc. to raise prices by about 10 percent in the second half of this month, its second such increase in April. Samsung and Hynix declined to comment today on their DRAM rates.

Prices may need to rise above $2 for Taiwanese DRAM makers to break even because they lag behind Elpida, Samsung, Hynix and Micron Technology Inc. in manufacturing technology, according to Barclays. Prices may climb above $1.50 during the second half of the year, according to Barclays.

Taiwan Faces Scrutiny Over Its D-RAM Developer

2009-04-20T05:36:00.002-03:00

Financial Times - 16/04/09

The Taiwan government is facing increasing scrutiny over Taiwan Memory, the company it established to reform the island’s struggling dynamic random-access memory chip industry.

Legislators on the economics committee passed a motion on Wednesday calling on the government to give regular reports on the company.

Pan Meng-an, the opposition party member who tabled the motion, said Taiwan Memory’s structure was already vastly different from what legislators and the industry had expected. “When Taiwan Memory was established, we had thought it would speed up industry consolidation and help Taiwan compete against South Korea, but that spark of hope turned into just a flash in the pan.”

Taiwan Memory was established last month in response to the D-Ram industry’s biggest ever crisis. A supply glut combined with the global economic crisis last year saw prices plunge sharply for the chip, which is mainly used in PCs to temporarily store memory.

Germany’s Qimonda, the only major European D-Ram maker, filed for bankruptcy this year and most other D-Ram producers are struggling with debt repayments amid mounting losses.

John Hsuan, Taiwan Memory’s chairman, has said that, rather than bailing out Taiwan’s D-Ram makers, he would pursue research and development opportunities that would create new markets for Taiwan chipmakers, which have long lacked their own technology. To achieve this, Taiwan Memory will go into partnership with Japan’s Elpida, the world’s third biggest D-Ram maker.

The two companies are expected to jointly apply for funding from the Taiwan government by the end of the month, Duh Tyzz-jian, director-general of Taiwan’s Industrial Development Bureau, said this week.

The Japanese government cleared Elpida’s co-operation with Taiwan Memory on Wednesday, but officials denied reports that Tokyo was considering injecting public funds into Elpida.

Mr Hsuan’s hopes of working with Micron as well as Elpida were dealt a blow last week when the US company announced it would not join Taiwan Memory. Micron will instead become a direct competitor with Taiwan Memory as it speeds up co-operation in research and development efforts with Nanya, its Taiwanese partner.

Nanya has also asked for “the same support from the [Taiwan] government” that Taiwan Memory will receive.

Taiwan Memory is fully government owned, but Yiin Chii-ming, Taiwan’s economic minister, has pledged to seek out private investors to take a more than 50 per cent stake in the company. The government would not be legally required to give reports on the company if it were privatised.

Nanya Plans To Rise Memory Chip Prices In April Again

2009-04-20T04:16:00.001-03:00

The China Post - 17/04/09

TAIPEI, Taiwan -- Nanya Technology Corp., Taiwan's second-biggest maker of computer-memory chips, plans to raise prices for the second time this month as industrywide production cuts helped ease a glut of the semiconductors. The chipmaker's in talks with customers including Hewlett- Packard Co. and Dell Inc. to increase prices by about 10 percent in the second half of this month after Nanya raised prices by a similar percentage in early April, Pai Pei-lin, vice president at the Taoyuan-based company, said yesterday.

Nanya and larger rival Powerchip Semiconductor Corp. surged by their daily limits in Taipei trading today as spot prices of the chip climbed to a two-month high. The global recession exacerbated a supply glut that forced semiconductor companies to cut output from the second half of last year.

“We have seen the effects of production cuts,” Pai said. “If this continues, we predict a clear up at the end of the second quarter and a shortage in the third quarter.”

Makers of computer-memory chips, which temporarily hold data and help computer processors run multiple programs simultaneously, lost a combined US$12.5 billion in 2007 and 2008, the most ever, according to Gartner Inc. analyst Andrew Norwood in London.

Asustek To Introduce Laptops With Intel Processors By June

2009-04-20T03:12:00.001-03:00

The China Post - 20/04/09

TAIPEI, Taiwan -- Asustek Computer Inc. will introduce a range of laptop computers that use Intel Corp.'s ultra low voltage processors before the end of June, said Nick Wu, an investor relations officer at the Taiwanese company. The Taipei-based company will release several models of the new laptop, with screen sizes of between 13 inches and 15 inches and a battery life that is “relatively higher than normal laptops,” Wu said yesterday. The price of the new laptop will be “similar or slightly higher” than Acer's low-power Timeline notebook, said Wu. Asustek, which introduced low-cost laptops in 2007, reported its first quarterly loss in February after the global recession reduced demand and foreign-exchange declines eroded earnings. The company's shares rose 4.7 percent to close at NT$45 in Taipei trading today. The stock has gained 22 percent this year, compared with a 31 percent gain in the TAIEX index.

Acer's US$799 Timeline has an eight-hour battery life, aluminum casing, and is 24 millimeters (0.94 inches) thick.

Chairman J.T. Wang said earlier this week Acer Inc. may overtake Hewlett-Packard Co. as the world's largest notebook computer maker in less than two years, led by sales of low-cost “netbooks” and slim laptops.

Acer Sees Rise In Shipments

2009-04-10T00:55:00.002-03:00

The Wall Street Journal - 09/04/09

BEIJING -- Acer Inc. said it expects shipments of its personal computers to rise 25% to 30% in the second quarter from a year earlier, boosted by demand for low-cost laptops.

The Taiwan company's chairman, J.T. Wang, also said Wednesday he is confident Acer can maintain an operating profit this year despite the weak global PC market.

Achieving an operating profit this year will be "a challenging target, but we think we can achieve that by introducing" new products, said Mr. Wang, whose company is the world's third-largest PC company by unit shipments.

Acer's operating profit in 2008 rose 38% to 14.07 billion New Taiwan dollars, or about US$415 million at current exchange rates.

Mr. Wang was speaking at an event in Beijing to launch new products for Acer, including an ultra-thin laptop using a low voltage Intel Corp. processor that enables eight hours of battery life. Mr. Wang said Acer hopes the product will "mean a lot to consumers world-wide," even as demand for PCs has decelerated in recent months.

Mr. Wang said he expects Acer's shipments of desktop PCs to fall 5% to 10% in the three months ending June 30 from the same period a year ago. But he said shipments of notebook PCs, including small, low-cost "netbooks," will likely rise 35% to 40% over the same period.

The Acer chairman said netbooks, which have become increasingly popular in the last year, will account for more than half of all global notebook PC sales in two years. The company leads the global netbook market with a 32% share of units shipped as of the fourth quarter of 2008.

At a separate event in New York Tuesday, Chief Executive Gianfranco Lanci said Acer plans to partner with a wireless service provider in the U.S. to offer netbooks to consumers, as it moves to expand its share of the North American market. Mr. Lanci told reporters to expect an announcement soon, though he declined to offer any details on what wireless providers Acer may be partnering with.

TFT-LCD Panel Global Uptake Expected To Rise In Second Half

2009-04-10T00:27:00.002-03:00

The China Post - 10/04/09

TAIPEI, Taiwan -- The global uptake of thin film transistor liquid crystal display (TFT-LCD) panels is expected to regain near full capacity in the second half of this year owing to increasing demand, a display market research and consulting firm forecast yesterday. With uptake having dropped to around 70 percent since the start of the global economic downturn in the final quarter of 2008, it is likely that it will rise to 80 percent in the second quarter of 2009 and further to 90 percent in the second half of the year, said David Hsieh, vice president of the Greater China Market at DisplaySearch, during the 2009 Taiwan FPD International Conference in Taipei.

DisplaySearch statistics show that global shipments of large-area TFT-LCD panels totaled 29.5 million units in February, up 23 percent from the previous month, with revenue rising 14 percent month-on-month to reach US$2.96 billion.

Both figures represent the first positive monthly growth since September 2008, due mainly to increasing rush orders and inventory refills from clients, according to DisplaySearch.

The growth could be an indication that the TFT LCD industry is at, or near, the bottom of a cycle, the company said.

Taiwan, which shipped 44 percent of the world's large area panels in 2008, plans to increase shipments by 12 percent in 2009, DisplaySearch data shows.

Hsieh predicted that China will become an important market for Taiwan's TFT LCD panel sector this year, thanks to that country's latest economic stimulus measures to encourage home appliance purchases by rural consumers.

The phase-out of traditional cathode ray tube (CRT) television sets — which presently number 150 million units worldwide — also bodes well for a promising market for the TFT-LCD sector in the coming years, Hsieh said.

Micron Technology Rejects Partnership With Taiwan Memory

2009-04-09T23:55:00.001-03:00

The China Post - 10/04/09

TAIPEI, Taiwan -- Micron Technology Inc., the biggest U.S. maker of computer-memory chips, rejected a partnership with state-led Taiwan Memory Corp., weakening the government's attempt to reorganize an industry that's posted two years of losses. The Boise, Idaho-based company will continue to work with Nanya Technology Corp., its local partner in Taiwan, Wu Chia- chau, chairman of Taoyuan-based Nanya, said at a press conference yesterday in Taipei. Wu said he was speaking on behalf of Micron.

Micron's decision undermines government prospects to use Taiwan Memory as a vehicle to revamp the US$23.6 billion global market for the chips. Concern about technology “leaking” to Elpida Memory Inc., the only partner of Taiwan Memory, was one of the major issues for Micron, executive Mike Sadler said April 5.

“Taiwan Memory has no structure, no money, it consists of nothing,” said Liway Chen, who rates the computer-memory chip industry “equalweight” at Polaris Securities Co. in Taipei. “If Elpida is left as the only one to join, then the prospects for TMC's success are not very high.”

Micron will continue to license technology to Nanya and their venture, Inotera Memories Inc., and will build closer ties with the two Taiwanese chipmakers by expanding cooperation to special memory chips, Wu said.

Micron, Nanya and Inotera have a deep partnership, while Taiwan Memory has only just started, Wu said, declining to elaborate.

Nanya Plastics Group, the largest investor in Nanya, will continue to inject cash into Inotera and Nanya, Wu said. Nanya Technology plans to raise money selling new shares, he said, refusing to say how many shares the company plans to issue.

“Nanya and Inotera fit the government's goal to develop in-house technologies, so we request the government to give us equal support,” Wu said. Micron is also in talks with the government, outside of the Taiwan Memory framework, to secure financial assistance to upgrade Inotera's factories, Sadler said April 5.

Taiwan in March named John Hsuan, honorary vice chairman at United Microelectronics Corp., to oversee the formation of Taiwan Memory. Economic Affairs Minister Yiin Chii ming said last month the company will focus on obtaining technologies from foreign chipmakers and will look for existing plants in Taiwan for manufacturing needs.

“John Hsuan respects Micron, Inotera and Nanya's decision, Taiwan Memory said in a statement.

Micron's rejection of the plan puts Tokyo-based Elpida in a leading position to secure funding from the Taiwan government, which has said it will provide up to NT$30 billion (US$888 million) to Taiwan Memory.

Elpida, Japan's biggest computer memory chipmaker, will develop dynamic random access memory, or DRAM, with Taiwan Memory and will jointly own intellectual property rights to new technologies, Hsuan said on April 1. The new business may also work with Micron, which needs permission from Micron's Taiwanese partners, Hsuan said at the time.

Elpida shares jumped 7.9 percent to close at 820 yen in Tokyo trading, compared with a 3.7 percent gain by the benchmark Nikkei 225 Index. Nanya Technology climbed 5.8 percent to NT$8.26, while the benchmark TAIEX index rose 4.1 percent. Both markets closed before the press conference.

Taiwan has invested about NT$900 billion in the DRAM industry, including about NT$300 billion in bank loans, creating about 223,000 jobs on the island, Hsuan said last month.

Early Warnings In The Supply Chain

2009-03-29T23:09:00.002-03:00

Financial Times - 24/03/09

When Edscha, a German manufacturer of sun roofs, door hinges and other car parts, filed for insolvency last month, it presented BMW with a crisis. The luxury carmaker was about to introduce its new Z4 convertible - and Edscha supplied its roof. "We had no choice to go to another supplier, as that would have taken six months and we don't have that. We had to help Edscha and try and stabilise it," BMW says.

Today, Edscha is still trading, thanks to the support offered by its leading clients. Nevertheless, BMW remains so worried about disruption to its supply chain that it has increased staff numbers in its risk monitoring department looking only at components-makers.

Such concerns are felt not just in the German automotive industry. Each week brings fresh failures among important suppliers in sectors from manufacturing to retail. Just-in-time supply chains and many companies' reliance on a few critical partners mean large manufacturers can be worryingly exposed.

So how should companies monitor whether their suppliers are getting into difficulty? And what should they do if they get into trouble?

The Swiss Federal Institute of Technology (ETH) in Zurich proposes four steps, some already widely adopted but others followed by only a few. But Stephan Wagner, a professor in logistics management there, says one of the simplest but often neglected tools is to communicate: "Talk to them. Then you can get a very good feel for what is going on."

That may be easier said than done in industries such as retail, where endless price cuts and changing demands have strained relations. Daniel Corsten, a professor specialising in supply chains at Madrid's IE business school, says suppliers have turned down help from some of Europe's largest retailers simply because trust has evaporated.

Maintaining good relationships with suppliers is thus vital. Marion Luckhurst, supply chain director at VT Group, the UK defence company, says that too often suppliers are afraid to reveal they are in trouble until it is too late. "We have said: 'Come and talk to us. Don't be afraid.' We think of it as a two-way street: when things are going well they can help us if we have worked through the bad times together."

The first step suggested by ETH is to establish a rating system for a company's main suppliers. The ratings should be based on financial information, with cash flow more important in many cases than profitability.

BMW looks at a variety of issues including the ownership structure. "You want to know where the hedge funds and private equity firms are," it says. It also maintains close contact with Audi and Mercedes, its main rivals, to swap information. The problem with most ratings, however, says Prof Wagner, is that too often they focus "solely on the past".

The second, related proposal is to set up an early warning system that tries to keep an eye on what is happening in the present. Such a system looks at operational matters such as whether quality problems are mounting at a particular supplier, as well as financial issues such as any attempt to change payment terms. Liam Brewer, managing director of Cargocare, an Irish haulage company, says: "If people want to pay later than the usual 45 days, then that is a warning sign that we would take very seriously."

Prof Corsten says it is important for companies to increase the frequency of communications with suppliers, pointing to Bosch which recently doubled their intensity. "Companies should do the scorecards more often, too," he adds. Just as important, though, is basic risk management: most simply, asking what the impact of an event would be and the probability of it happening. Prof Corsten argues the current crisis shows many companies failed to make such assessments and are paying the price.

The ETH's third and fourth steps are more far-reaching - and also the ones that tend to be neglected. The main recommendation is to extend the ratings and communication with suppliers further down the chain.

Prof Wagner says: "Many companies don't even know who their second- and third-tier suppliers are." He points to the example of a German carmaker where production nearly stopped after the maker of thread for its seats went bankrupt.

Companies first need to identify their essential components and then find out who the subsuppliers for them are. The results can be surprising. Ms Luckhurst says some of VT's critical suppliers are their smallest and most vulnerable but they make parts nobody else can provide.

Prof Corsten says big companies can adopt sophisticated solutions. Daimler has an online supply chain monitoring tool that asks suppliers throughout its supply chain for information including their capacity and their inventory. When there is a problem, red or yellow lights flash up according to the severity. "You have to break down the anonymity of your supply chain," he says.

Such solutions, however, are not suitable for smaller companies where often all is needed is "just the name and telephone number of the sub-supplier", he adds.

The final step is to examine the interdependencies in a company's supply base. Prof Wagner says many groups blithely assert that they have dual or multiple sourcing and would be able to make the switch if one ran into trouble. But research by ETH suggests this confidence may be misplaced: if one supplier in a particular area goes bankrupt, the probability of other suppliers in that sector becoming insolvent rises. Thus ETH's study found that if Michelin, the French tyremaker, folded, the probability would rise significantly that Goodyear, its US rival, would too, and similarly with BASF and Dow Chemical.

Prof Wagner says companies should look out for similarities between their suppliers: do they serve the same companies, the same countries or the same industry? Do they have similar shareholders?

At VT, Ms Luckhurst says she looks closely at "who else are they supplying. If there are a lot of contracts with a troubled company then that needs looking at." VT, she adds, evaluates a supplier's stability as well as its prices, as low cost also means thin margins.

"It isn't just about the price," agrees Prof Wagner. "Default probability should definitely be included and companies should dig deeper."

In any case, swapping from one supplier to another if the first collapses is easier said than done. BMW, Audi and Mercedes are jointly helping out several suppliers besides Edscha with money and other tools, as otherwise it would mean stopping production for several months.

Such financial support is becoming increasingly common across industries as manufacturers find they cannot afford to let suppliers collapse. Ms Luckhurst says such measures pay off in the long run. "This is a period of pain and we feel we have a responsibility. Suppliers have long memories too."

Systems that deliver: the logistics of protecting your supplies

Communicate Perhaps the best, and simplest, tool is to talk regularly to all critical suppliers and build good relationships with them. Trust is very important and suppliers tend to remember companies who have been good to them.

Set up a rating system

Find out who your critical suppliers are and then analyse their financial performance. Pay attention to cashflow as well as profitability and things like ownership structure and customer base.

Have an early warning system

Any change in quality of products or attempt to modify payment terms should have alarm bells ringing. Talk to suppliers immediately; they may be too proud initially to confess to the scale of their problems

Know your suppliers' supplier

Too often a problem far down the supply chain can rebound very quickly to the top. Make sure you have details of the sub-suppliers of your main components makers. Big companies could install software programmes to help.

Multiple sourcing is no panacea

Check your different suppliers for interdependence. If they supply the same companies, industries or countries there is a higher risk of supplier B going bankrupt if supplier A does too.

Via To Help New PC Makers Enter The Netbook Market

2009-03-19T05:54:00.001-03:00

Financial Times - 18/03/09

Via Technologies, Intel's smaller rival in the processor market, has pledged to help a new breed of low-cost Chinese manufacturers break into the netbook market, in an initiative that could further squeeze PC makers' margins.

Tom Hsu, head of Via's China unit, told the Financial Times that a product platform organised by Via Technologies for making cheap netbooks was helping companies with no previous experience in PC manufacturing and design to produce low-price products starting from May.

While branded netbooks such as Asustek's Eee PC sell for Rmb3,500 ($512) or more in China, non-brand locally made netbooks - so-called whitebox netbooks - are already available from Rmb2,000.

"We hope to get the price below Rmb2,000 this year and down to Rmb1,500 next year," Mr Hsu said.

He predicted that the whitebox segment would capture up to 20 per cent of the global netbook market - forecast at about 35m units - this year.

Over the past three months, machines that resemble the Eee PC, which is marketed by Asus, but lack brand names and sell for much less, have appeared in second-tier electronics markets in some Chinese cities. Other mini-notebooks similar to HP, Dell and Acer's netbooks are also being offered for sale.

Although analysts are sceptical about the ability of the non-brand vendors to grab significant market share, they say that if Via is successful in supporting the vendors, China's PC market could see a repetition of a phenomenon that has transformed the country's handset market.

A group of little-known, small electronics traders mostly from the southern manufacturing hub of Shenzhen snapped up much of the lower-end handset market after Mediatek, a Taiwanese chip design house, started offering them turnkey solutions that enabled them to make mobile phones.

Those handsets, sometimes imitations of branded products but sometimes just cheap handsets with flashy external design and extra functions such as flashlights but without after sales service, were so successful that the government was forced to legalise them.

"We intend to do the same thing in the netbook industry as Mediatek did in the handset sector," said Mr Hsu. "Our platform cuts the development time for a netbook from design to market launch from eight to just two months."

He added most of Via's customers for the whitebox netbook platform were former manufacturers of handsets and consumer electronics gadgets, such as MP3 players and DVD players.

Executives at two Chinese chip design companies confirmed that several dozen companies that had no prior expertise in the PC industry were working on such products and were likely to launch them later this year.

Industry executives also said that the new entrants were planning to export their low-end netbooks to other emerging markets such as Mexico.

The netbooks made on Via's platform are equipped with a Microsoft Windows operating system.

Powerchip, Nanya Spurn State's Taiwan Memory

2009-03-13T02:51:00.002-03:00

The China Post - 13/03/09

TAIPEI, Taiwan -- Powerchip Semiconductor Corp. and Nanya Technology Corp., Taiwan's two biggest memory chipmakers, will pursue their own revival plans after spurning a government proposal to reorganize the unprofitable industry. Powerchip and subsidiary Rexchip Electronics Corp. said yesterday they resumed merger talks with Japan's Elpida Memory Inc. Nanya and unit Inotera Memories Inc. said they'll keep their ties with Micron Technology Inc. and won't participate in the government's proposed plan for newly formed Taiwan Memory Co. to buy factories from domestic chipmakers.

Elpida, Powerchip and ProMOS Technologies Inc. shares slumped as comments from Taiwan officials dimmed the prospects for public funding, while Samsung Electronics Co. and Nanya gained on optimism weaker producers will be forced out of the industry. The government this week ruled out state-led mergers, damping speculation that the government would lead a “big bang” consolidation of the island's six memory-chip makers.

“The government's dream of an industry-wide consolidation has collapsed,” said Robyn Hsu, who helps manage US$3 billion funds at Capital Investment Trust Corp. in Taipei. “The plan is an illusion.”

Elpida tumbled a record 19 percent to close at 421 yen on the Tokyo Stock Exchange. Powerchip lost 5.1 percent to close at NT$3.16, and Nanya was unchanged at NT$5.82 in Taipei. Samsung rose 2.1 percent in Seoul.

Elpida, Japan's largest computer-memory chipmaker, resumed merger discussions with Powerchip and Rexchip, Eric Tang, a spokesman for both Taiwanese chipmakers, said in a telephone interview yesterday. The companies aim to reach an initial agreement by next week. Yukio Sakamoto, chief executive officer of Tokyo-based Elpida, said in December that his company had begun merger talks with Powerchip, Rexchip and ProMOS Technologies Inc.

“It's too complicated and difficult to have an outright merger,” Economic Affairs Minister Yiin Chii-ming told reporters in Taipei Wednesday. Newly formed Taiwan Memory Co. “will focus on obtaining technologies and then look for existing plants in Taiwan for manufacturing needs.”

The comment “differs widely from what the government's been telling us about an industry-wide consolidation,” Pei-lin Pai, vice president of Nanya, said in an interview. Inotera President Charles Kau said his company will stick with Nanya, and that the companies won't sell their plants to Taiwan Memory. Nanya and Inotera, units of the Formosa Plastics Group, license Boise, Idaho-based Micron's chip-manufacturing technology.

Mike Sadler, an executive vice president at Inotera, a venture between Nanya and Micron, said the U.S. company may a decision in two weeks following discussion with Taiwan Memory. Elpida spokeswoman Kumi Higuchi declined to comment on the Taiwan minister's statements.

Makers of the chips, which temporarily hold data and help computer processors run multiple programs simultaneously, lost a combined US$12.5 billion in 2007 and 2008, the most ever, as the global recession exacerbated a glut in the industry, according to Gartner Inc. analyst Andrew Norwood in London.

On Dec. 16, the ministry of economic affairs said in a statement that it would “encourage industry consolidation and mergers” and that the government would support technology development after consolidation in the nation's computer-memory chip industry.

Taiwan's computer-memory chipmakers “need to put out their own fires,” John Hsuan, 57, told reporters in Hsinchu on March 10. “The purpose of Taiwan Memory isn't to merge or bail out local chipmakers. It's to revamp the industry.”

The honorary vice chairman at United Microelectronics Corp. said Taiwan Memory wouldn't pursue a merger of domestic chipmakers and that the company wouldn't receive more than NT$30 billion (US$872 million) in state funds. The amount is less than half the amount investors had been expecting, BNP Paribas SA said in a report yesterday.

Still, the two smallest local chipmakers may opt to partner with Taiwan Memory.

“1We would like work with Taiwan Memory and we could try to rent or sell our factory to it,” Wilson Wen, executive vice President of Winbond Electronics Corp., said yesterday.

ProMOS, Taiwan's most unprofitable computer-memory chipmaker, doesn't rule out partnering with state-controlled Taiwan Memory Co. on production, Chief Financial Officer Jessie Peng said by telephone yesterday.

Chen Chao-yih, head of the economic ministry's industrial development bureau, declined to immediately comment on the reactions from the chipmakers. Park Seong Ae, a spokeswoman for Ichon, Korea-based Hynix Semiconductor Inc., declined to comment as did Lee Eun Hee, a spokeswoman for Suwon, Korea-based Samsung.

“The government started out with this grand plan and now it must have realized that there was a huge gap between the dream and reality,” said Bevan Yeh, who helps manage the equivalent of US$1.2 billion at Prudential Financial Securities Investment Trust Enterprise in Taipei. “This backpedaling may help the industry in the long run because it allows firms to go bankrupt, which would reduce oversupply and boost chip prices.”

Taiwan Pares Chip Plan

2009-03-13T00:49:00.002-03:00

The Wall Street Journal - 13/03/09

TAIPEI -- Taiwan's government appeared to scale back its ambitious plan to retool the island's troubled computer-memory industry, sending shares of memory-chip makers down sharply as investors worried that a hoped-for consolidation might not materialize.

Minister of Economic Affairs Chii-Ming Yiin said Thursday that a newly formed memory-chip company backed by the government may look to buy factories from chip makers rather than acquire the companies outright. The statement followed last week's announcement of a blueprint for restructuring the industry in which the new holding company, called Taiwan Memory Co., would coordinate strategy for Taiwan's six memory-chip makers and possibly merge them. The new company was also to seek advanced technology from Elpida Memory Inc. of Japan or Micron Technology Inc. of the U.S.

Investors and executives had hoped the plan would bring relief to the highly fragmented memory-chip industry, which has been devastated by the combination of the economic downturn and chronic over-supply problems. Prices of dynamic random access memory, or DRAM, have been falling since early 2007. DRAM is used to temporarily store data in personal computers and electronic gadgets.

In response to the apparent policy shift, shares in Elpida, Japan's sole DRAM maker, plummeted 19% in Tokyo Thursday to 422 yen ($4.34), their lowest level since mid-December. The change in the government's strategy "would give Elpida no cash," said Yuichi Ishida, an analyst at Mizuho Investors Securities.

Shares of Taiwan chip makers also fell. Powerchip Semiconductor Corp. fell 3%, ProMOS Technologies Inc. fell 6.7% and Inotera Memories Inc. declined 1.4%. "This is very different from what we had expected earlier," said ProMOS spokesman Ben Tseng.

Mr. Yiin made it clear last week that the government didn't plan to rescue individual DRAM companies. Still, expectations were high that the plan could help alleviate the industry's suffering by consolidating Taiwan's companies and forming an alliance with Elpida and Micron against Samsung Electronics Co. and Hynix Semiconductor Inc., the South Korean companies that now dominate the industry.

Mr. Yiin's comments Thursday suggested the government had decided that merging the DRAM companies would be too complicated. The government now says the new company may acquire plants from chip makers in exchange for the DRAM companies' getting a stake in Taiwan Memory.

Taipei Urged To Contain D-RAM Costs

2009-03-12T00:23:00.001-03:00

Financial Times - 11/03/09

The Taiwan government should spend "as little money as possible" to reshape its struggling D-Ram sector, according to John Hsuan, who is leading the rescue of the island's memory chip companies.

Mr Hsuan, chairman of the newly established Taiwan Memory Company (TMC), said yesterday he hoped a government injection of no more than T$30bn ($866m), coupled with further private investment, would be enough to acquire key technologies from foreign competitors and ensure competitiveness in the industry.

Taiwan's D-Ram companies employ some 28,000 people locally and account for up a quarter of the $24bn global industry. They make the island - the world's second-biggest producer, behind South Korea - of chips used in computers for short-term storage.

The companies have fallen on hard times since the economic downturn, exacerbated by over-expansion. The industry owes about $40bn in loans and many companies have experienced difficulties repaying debt.

The Taiwan government, which sees its D-Ram companies' lack of proprietary research as a key factor in their poor performance, last week set up TMC as its solution to the mounting losses.

TMC, in which government ownership would be less than half, is tasked with buying technology from either Micron of the US or Elpida of Japan, and then brokering some form of consolidation between the six local chipmakers.

Mr Hsuan told reporters yesterday the establishment of TMC was just one of the government measures aimed at reforming the industry. "TMC is a project to reform the industry, not to consolidate it or to rescue it."

Frank Wang, analyst at Morgan Stanley, said he believed Mr Hsuan's main goal was limited to ensuring that Taiwan had homegrown D-Ram technology. "Everyone thinks he set up a company to absorb the assets, but his main point is that this is not the case."

Analysts' estimates of the amount it would take to relieve the debt burden of Taiwan's D-Ram companies and to finance the next round of upgrades range far above the T$30bn proposed by Mr Hsuan.

In a note to clients, Eric Lin, analyst at Goldman Sachs, said it would cost T$170bn to convert Taiwan's D-Ram plants to technology that would be competitive with Korea's Samsung, the market leader.

There are signs that a pick-up in consumer demand for electronics in China, spurred by Beijing's stimulus measures, is relieving some of the pressures facing the industry.

Taiwan Semiconductor Manufacturing Co, the world's biggest contract chipmaker, which does not make D-Ram but produces a other chips, yesterday said that its first-quarter results were likely to be better than expected because of rush orders from China and a stronger US dollar.

Taiwan Seeks Funds For Chip Producer

2009-03-10T23:13:00.002-03:00

The Wall Street Journal - 11/03/09

TAIPEI -- Taiwan's government may inject as much as 30 billion New Taiwan dollars, or about US$860 million, into Taiwan Memory Co., the new company that will combine the island's memory-chip makers, and hopes to attract more funds from private investors.

John Hsuan, who was named last week to oversee the creation of Taiwan Memory, said potential private investors include Taiwanese and foreign makers of dynamic random-access memory chips, which are widely used in personal computers.

Mr. Hsuan said he plans to meet with three prospective investors this week, including foreign equity funds. He declined to reveal their names.

Mr. Hsuan, a former vice chairman at United Microelectronics Corp., said he plans to visit executives at Japan's Elpida Memory Inc. and Micron Technology Inc. of the U.S. in two weeks to discuss obtaining access to their chip technologies and patents.

Taiwan said in mid-December that it plans to consolidate the island's DRAM makers, which have been suffering from steep losses amid a supply glut. The government last week unveiled details of the consolidation, including the plan to set up the new company. Minister of Economic Affairs Chii-Ming Yiin said the government will own less than 50% of Taiwan Memory and the company will seek an alliance or merge with either Elpida or Micron.

The government hopes to select a partner for Taiwan Memory by the end of this month and sign a deal within three months, Mr. Hsuan said.

If Taiwan Memory gains access to key technologies and has independent research capability, the company can expand the development of DRAM chips for a wider range of products, including mobile devices, he said.

Mr. Hsuan said there is still no sign of an industry recovery. "I don't think there will be a strong recovery even after the global financial crisis is over," he said. He said he doesn't expect the increasing popularity of netbooks -- low-cost laptop computers -- and a new version of the Windows operating system, Windows 7, to spur a significant increase in demand for DRAM chips.

Toshiba's Puzzling Bet On Drives

2009-01-15T04:25:00.001-02:00

The Wall Street Journal - 15/01/09

The faster Fujitsu says adios to its unprofitable, hard-disk drive business the better. For Toshiba, however, the merits of buying the unit are less clear.

Toshiba said Wednesday that it's in talks to buy the business. Analysts figure the deal could be worth as much as $440 million.

For that, Toshiba would become the world's largest maker of 2.5-inch drives that are used in everything from notebook computers to car-navigation systems. The current No.1 is Hitachi, according to Techno Systems Research Co. It would also pick up a fairly profitable 3.5-inch drive operation, and, of course, economies of scale in manufacturing.

But all this comes with some strategic fuzziness. Hard-disk drives compete directly with the flash-memory chips that Toshiba has already said will make up a core pillar of its future revenue -- along with nuclear power. In fact many industry observers believe that flash memory-based, solid-state drives could eventually replace the older hard-disk drives altogether in new technology. Apple Computer's newer iPod touch, for example, uses flash memory. The company's older iPods used hard drives.

So the interest in spending precious cash to beef up a business that could cannibalize a touted chief-revenue driver has many scratching their heads.

This may be a very expensive hedge. Toshiba points out that hard drives are lower cost per bit of memory compared to flash memory. And the company expects both markets to continue growing for the foreseeable future. Some technology actually incorporates both hard disk and flash memory.

But the punt on hard disks carries other risks too -- beyond the expected slowdown in electronics sales. Computer makers like to have multiple sources for hard drives, and might actually cut back purchases from a newly-merged firm with a larger market share, analysts at Credit Suisse point out. And the core 2.5-inch disk business is becoming increasingly commoditized.

For now, investors are focusing on the potential for Toshiba to turn Fujitsu's ailing business around. Fujitsu expects the unit that makes hard disks to lose more than $100 million this fiscal year -- making it the worst performing division at the company. Shares of both companies jumped on the news, with Toshiba gaining 6%.

That's a lot of excitement over a strategically dubious acquisition.

Toshiba Eyes Fujitsu Disk Business

2009-01-15T04:14:00.001-02:00

The Wall Street Journal - 15/01/09

TOKYO -- Toshiba Corp. said that it is in talks to buy Fujitsu Ltd.'s hard-disk drive business in a deal that could make Toshiba the world's largest supplier of small hard-disk drives used in laptop computers.

Fujitsu currently loses money on the operations, but the purchase, for an estimated price of as much as 40 billion yen ($448.8 million), would enable Toshiba to benefit from economies of scale and gain the upper hand in price competition with rivals such as Hitachi Ltd. and Western Digital Corp.

A deal also would allow Fujitsu to unload an operation that the company expects to lose more than 10 billion yen in the fiscal year ending March. The sale "will be positive for Fujitsu as it has planned to solve [loss-making] problems in its HDD business," said Masaharu Sato, an analyst at Daiwa Institute of Research.

Fujitsu has been considering several options regarding its HDD business and is currently in talks with several firms, a Fujitsu spokesman said Wednesday.

The company previously had been in talks with Western Digital over the HDD arm's sale. The Fujitsu spokesman declined to comment further on Toshiba's interest in the operations.

Hard-disk drives measuring 2.5-inches are used to store data in electronic products such as laptop personal computers.

The possible consolidation comes at a time when the electronics industry is under pressure from slackening demand because of the global economic slump.

Japanese manufacturers in particular are suffering from a stronger domestic currency that is reducing the value of overseas revenue when converted into yen.

Wednesday, Hitachi Ltd. said it will launch tender offers valued at as much as 26.7 billion yen for affiliates Hitachi Koki Co. and Hitachi Kokusai Electric Inc. The move is an attempt to make them subsidiaries and better coordinate expansion of its businesses in areas such as rechargeable batteries and telecommunications.

High-Tech Firms Take To Netbooks Market

2009-01-08T10:34:00.002-02:00

The Wall Street Journal - 07/01/09

A new breed of low-priced laptops called netbooks have been thriving during the downturn -- so well, in fact, that many high-tech companies are scrambling to adapt.

The responses by these high-tech companies will be a hot topic at this week's Consumer Electronics Show. They include not only new netbooks -- which typically cost $300 to $500, and often use Intel Corp.'s Atom chip -- but products that address shortcomings of the new category and other portable PCs.

Netbooks, for example, tend not to be very good at displaying graphics and playing videos. So Hewlett-Packard Co., for example, on Tuesday introduced a $699 laptop that beefs up those capabilities with chips from Advanced Micro Devices Inc. H-P's new dv2 model is less than one inch thick and offers many features found in higher-end products such as Apple Inc.'s MacBook Air, which starts at $1,800.

Another problem with netbooks, and other laptops, is that they tend to start up too slowly and run out of power too quickly. Phoenix Technologies Ltd. is trying to address those issues with a downloadable layer of software, called HyperSpace, that lets users do simple chores such as calling up Web sites without waiting for an operating system to boot up.

The activity is the latest sign that technology segments are converging at an accelerating rate, driven by competitive pressures that the recession is amplifying. Companies including Phoenix are trying to help netbooks and other portables work as simply as cellphones, just as makers of those pocket-size devices are improving their ability to tap into the Web.

In another tactic, Qualcomm Inc. and Freescale Semiconductor Inc., which make chips for cellphones, are discussing plans at CES to offer their technology for netbooks, too. Henri Richard, Freescale's senior vice president and chief marketing officer, predicts that new entrants such as cellphone makers will join the race to make portable computers. "Netbooks change the paradigm for how you enter the computing space," Mr. Richard says.

The new products, sometimes called mini-notebooks, were exemplified by the success of the Eee PC that Taiwan's Asustek Computer Inc. introduced in 2007. Its initial models started at $299, had a seven-inch screen, used Linux rather than Windows and had no disk drive. The portables stored a small amount of data on flash memory chips.

Since then, companies such as H-P, Dell Inc. and Acer Inc. have introduced machines with a range of features, including larger screens, disk drives and Microsoft Corp.'s Windows XP software.

One of the biggest cheerleaders has been Intel, which helped popularize the term netbooks and this past spring introduced the low-priced Atom chip as a calculating engine for the new devices. "Suffice it to say, demand turned out to be much larger than we anticipated," says Bill Calder, an Intel spokesman.

Gartner analyst Mika Kitagawa estimates that more than 10 million netbooks were sold in 2008, surpassing the research firm's earlier estimate of eight million -- and leaping from the hundreds of thousand believed to have been sold in 2007.

Some companies initially predicted that netbooks would find their biggest audience as a first computer purchase for customers in emerging economies. Now, though, many industry executives agree that netbooks are mainly being purchased as a second or third computer in more affluent households -- good for quickly checking Web sites, but not powerful enough for chores such as burning DVDs.

Another issue has been whether netbooks are expanding the PC market, or taking sales from more expensive laptops. "This is a class of PC devices that is much more incremental than it is cannibalizing," argues Brad Brooks, corporate vice president of Windows consumer product marketing.

Mr. Brooks estimates that more than 80% of netbooks now ship with Windows, compared with less than 10% when the devices first went on sale. But most run XP, and analysts believe that Microsoft receives less revenue and profit from that product than the newer Windows Vista software that comes with other laptops. Intel has said its prices and profit margins on Atom also are lower than on some other chips.

Any line between netbooks and higher-end laptops stands to get even blurrier, as competition causes companies to add more features to their products. Dell, for instance, now sells a $499 netbook with a screen measuring 12 inches, essentially a scaled-up version of an earlier product with an 8.9-inch screen. H-P, in addition to its higher-priced dv2, at CES is introducing a $499 extra-durable netbook with a 10-inch screen that is aimed at business customers.

Jonathan Kaye, the marketing director for H-P's consumer notebooks division, said that until recently, PC companies have been building machines that conform to "a fairly strict definition of what a netbook is," set largely by Intel's specifications. But, he adds, "that could change over time" as manufacturers add more sophisticated features.

Roger Kay, an analyst at Endpoint Technologies Associates, says H-P's new laptop is evidence that netbooks and the competition they have spurred are dragging down PC prices and taking sales from more-expensive models. PC makers are "eating their children," he says.

Chip makers certainly don't intend to let Intel run away with the market. Via Technologies Inc. is expected to discuss its competing microprocessors for netbooks at CES.

AMD, though not selling a chip for netbooks, says that most consumers will prefer machines like the dv2 that use its microprocessors and more powerful graphics circuitry, in a combination code-named Yukon that it is announcing Tuesday. Nvidia Corp., another maker of graphics chips, wants to convince netbook makers to use one of its graphics chips alongside Intel's Atom -- providing what it estimates to be 10 times the performance of the accessory chips Intel offers with its microprocessor.

Then there is the issue of the time it takes to start Windows. Phoenix, which sells PC makers built-in programs that control the boot-up process of their systems, estimates that its HyperSpace software can let users start surfing the Web in a few seconds, save energy and avoid security problems associated with Windows. The software comes in two versions, priced at $39.95 and $59.95 for a year of use.

Taiwan Prepares To Assist Struggling Companies

2009-01-06T00:52:00.002-02:00

The Wall Street Journal - 06/01/08

TAIPEI -- The Taiwan government said it plans to provide 200 billion New Taiwan dollars(US$6 billion) in financial aid for struggling large companies, with memory-chip maker Nanya Technology Corp. aiming to submit a proposal to the government for assistance as soon as this week.

The legislature has approved half of the budget and is still reviewing the proposal for the other half, said Shih Yeh-Shiang, a vice Minister of Economic Affairs.

Taiwan's export-dependent economy is feeling the sharp slowdown in global trade, and the island's producers of dynamic random access memory chips are facing the sector's worst downturn.

After DRAM makers lost money for at least four consecutive quarters because they overestimated demand in recent years, hopes for a recovery have been dashed by the global crisis.

Nanya, Taiwan's second-largest maker of DRAM chips by revenue after Powerchip Semiconductor Corp., has discussed its proposal for government assistance with U.S. strategic partner Micron Technology Inc. but hasn't decided on the amount it will seek from the government, a Nanya spokesman said. Micron officials weren't available for comment.

Nanya is the second Taiwanese memory-chip maker to seek state help following a similar move by Powerchip, which last month submitted a proposal for assistance along with its Japanese partner Elpida Memory Inc.

Powerchip, however, was told by the government to revise the proposal. Mr. Shih said the Powerchip submission "fell short of expectations" but didn't elaborate.

Powerchip spokesman Eric Tang said the company is in talks with Elpida on a revised proposal and hopes to submit it as soon as possible.

Chipmakers In Merger Talks To Counter Glut

2008-12-29T00:02:00.001-02:00

The China Post - 27/12/08

TOKYO/TAIPEI -- Elpida Memory Inc., Japan's largest computer-memory chipmaker, has begun merger talks with Powerchip Semiconductor Corp. and two other Taiwanese semiconductor companies to counter a glut that's widening industry losses. “Ideally, the four companies should come together as one,” Yukio Sakamoto, chief executive officer of Tokyo-based Elpida, said in an interview after confirming the discussions with Powerchip, Rexchip Electronics Co. and ProMOS Technologies Inc. He declined to elaborate on details of the negotiations.

A combination would be the biggest reorganization in the US$28.8 billion computer-memory chip industry since 1999, when Elpida and Hynix Semiconductor Inc. were formed after falling prices forced mergers among Asian chipmakers. The group would challenge Samsung Electronics Co. as the world's biggest producer.

“A merger would help cut costs as the surviving entity would retire inefficient factories and workers,” said Robyn Hsu, who helps manage US$4.9 billion in assets at Capital Investment Trust Corp. in Taipei. “And that would help companies return to profit.”

Falling prices of dynamic random-access memory, used in most computers to speed up operations, have led Taiwanese chipmakers to post six consecutive quarters of losses. Industry leader Samsung said this month that the glut is making it “difficult” for the company to profit from chips, while analysts estimate Hynix will post a record operating loss this quarter.

Powerchip Spokesman Eric Tang and ProMOS Spokesman Ben Tseng confirmed they are negotiating with Elpida, declining to give details. ProMOS, which asked for a government bailout earlier this month, is also in talks with Micron Technology Inc. about technology cooperation, Tseng said by phone Friday.

“This is like a marriage proposal, and the government will choose whoever can offer the best terms,” Tseng said, declining to give further details.

Hsinchu-based Powerchip, Taiwan's largest memory chipmaker, submitted a proposal to the government Friday for a bailout, Tang said. It plans to deepen cooperation with Elpida and Rexchip to improve its competitiveness. An alliance with ProMOS to boost its market share and reduce competition is also included in the bailout plan, Tang said.

Falling prices will drive down DRAM industry revenue to US$24.9 billion in 2009 from US$28.8 billion this year, according to estimates at UBS AG this month. Prices of the benchmark DRAM have tumbled 61 percent this year to a record low, according to Taipei-based Dramexchange Technology Inc., operator of Asia's biggest spot market for chips.

Elpida and the three Taiwanese companies accounted for 23.9 percent of global DRAM revenue at the end of the third quarter, in line with market leader Samsung's share, according to estimates at Dramexchange.

Sakamoto projected Elpida will post a record annual operating loss as the global recession exacerbated a glut in the market.

The Japanese chipmaker, which in November reported its fourth straight quarterly loss, may have an operating loss of 120 billion yen to 140 billion yen (US$1.55 billion) in the year ending March 2009 if DRAM prices don't rebound, Sakamoto said.

Elpida is considering asking private equity firms and some manufacturing companies for more than 50 billion yen in funds for Rexchip, following the company's announcement this month that will buy back 50 billion yen of convertible bonds, Sakamoto said. He declined to identify the companies.

Elpida climbed 3.8 percent to close at 517 yen on the Tokyo Stock Exchange Friday. The stock has plunged 87 percent this year, compared with a 43 percent drop by the benchmark Nikkei 225 Stock Average.

AU, Chi Mei Open To Panel Maker Mergers

2008-12-26T08:19:00.001-02:00

The China Post - 26/12/08

TAIPEI, Taiwan -- AU Optronics Corp. and Chi Mei Optoelectronics Corp., on course to post record losses, said they are open to mergers with rival liquid-crystal-display makers to restore profitability. AU, Taiwan’s largest LCD maker, will consider all proposals beneficial to shareholders, spokeswoman Yawen Hsiao said by phone today. Chi Mei is “open-minded” to mergers and acquisitions, the Tainan-based company, AU’s closest rival, said in a statement.

A consolidation of LCD producers would be the second government-backed effort for the island’s industries this year, after Taiwan said this month that makers of computer memory chips should combine to cope with continued losses. Prices of 17-inch monitor panels, the most common size, will fall by a “low teens” percentage this quarter, continuing declines from earlier this year, Hsinchu-based AU forecast in October.

“The government will support continued development of the panel industry and will do its best to assist companies to overcome difficulties they face now,” Premier Liu Chao-shiuan said on national television today after meeting Chi Mei founder Shi Wen-long in Tainan.

AU doesn’t have an acquisition target at present, Hsiao said. The company bought Quanta Display Inc. in 2006, vaulting it to become the world’s third-biggest LCD maker behind Samsung Electronics Co. and LG Display Co.

Chi Mei said in its statement after markets shut yesterday that it doesn’t have a concrete plan on whether it will merge with other companies.

AU declined 0.5 percent to close at NT$22 on the Taiwan Stock Exchange, while Chi Mei dropped 2.4 percent to NT$10. The island’s TAIEX index slipped 0.2 percent.

Chunghwa Picture Tubes Ltd., Taiwan’s third-biggest LCD maker, welcomes government measures to help boost its competitiveness, Chief Financial Officer James Wu said by phone, declining to elaborate.

Taipei-based Hannstar Display Corp., the fourth-largest maker, is open to consolidation, spokesman Justin Chien said.

Government officials said Chi Mei and AU should discuss merging with each other to be more competitive, the Economic Daily News reported today, without identifying the people. The proposal came after company executives visited Economic Minister Yiin Chii-Ming, the Taipei-based newspaper said.

AU will probably post a record net loss of NT$8.6 billion (US$261 million) this quarter, according to the median of 13 analyst estimates compiled by Bloomberg. Chi Mei may report a NT$11.9 billion deficit, based on 10 estimates.

Chip Makers Feel Squeeze

2008-12-15T07:47:00.001-02:00

The Wall Street Journal - 15/12/08

SINGAPORE -- Rapidly declining demand for semiconductors because of the global economic slowdown is squeezing Asian chip makers already bruised by a supply glut and losses, forcing them to scramble to stay afloat.

Powerchip Semiconductor Corp., Taiwan's biggest maker of dynamic random access memory chips by revenue, said Friday it is studying a plan to ask the Taiwan government to buy a stake in Rexchip Electronics Corp., a joint venture with Japan's Elpida Memory Inc.

Elpida, Japan's sole maker of DRAM chips, widely used in personal computers, separately said Friday it is considering various options for raising new funds, including a new share issuance by Rexchip. This came after the company was forced to redeem its entire 50 billion yen ($549.2 million) convertible bond because of its weak share price.

These announcements came as Singapore chip maker Chartered Semiconductor Manufacturing Ltd. said Friday it expects a wider net loss and lower revenue in the current fourth quarter due to deteriorating market conditions, comments that further eroded confidence in an already battered industry.

"As the quarter is progressing, we are seeing some of our customers postponing their deliveries due to, what we believe are, weaker market conditions and their intent to keep inventories low," said Chartered Chief Financial Officer George Thomas.

In response, Chartered said it eliminated 273 contract positions and will shut down some of its operations during the Christmas holiday week. It has also instructed employees to clear their leave by the end of the year.

In November, Chartered registered with the U.S. Securities and Exchange Commission to issue and sell "from time to time" up to $955 million of ordinary shares, preference shares, debt securities and warrants.

The Semiconductor Industry Association said last month fourth-quarter global semiconductor sales will drop 5.9% from the previous quarter, while 2009 sales will decline by 5.6% to $246.7 billion.

With no clear indication on when the global economy will recover, major industry players such as Taiwan Semiconductor Manufacturing Co., United Microelectronics Corp., Samsung Electronics Co. and Hynix Semiconductor Inc. have already announced measures to cut costs. Those include cutting production, future capital spending, executive pay and implementing hiring freezes.

Woori Investment & Securities Analyst Park Young Ju said some chip makers may receive support from their respective governments, given their importance to the economy in terms of output as well as employment.

Taiwan's ProMOS Technologies Inc. recently sought government assistance to extend the payment of loans, and Taiwan's Ministry of Economic Affairs Industrial Development Bureau Director General Chao-yih Chen said the government may consider buying stakes in DRAM makers.

Sharp To Close Two LCD Panel Production Lines

2008-12-12T09:29:00.001-02:00

The China Post - 12/12/08

TOKYO -- Japanese electronics maker Sharp Corp. will shut down production lines for liquid crystal display panels at two domestic plants due to faltering global demand for personal computers and mobile phone handsets, a report said Thursday. Sharp, a leading maker of liquid crystal display panels and flat-panel TVs, will slash some 300 contract workers in line with the production halt, said the evening edition of the Nikkei, Japan’s top business daily, citing no sources.

AU Optronics Delays Buiding Central Plant

2008-12-12T09:23:00.001-02:00

The China Post - 12/12/08

TAIPEI, Taiwan -- AU Optronics Corp., Taiwan’s largest maker of liquid-crystal displays, will delay the construction of a factory in central Taiwan as the global recession hurts demand. An 11th-generation plant in the Erlin district of Taichung was originally scheduled for construction between 2011 and 2012, and will now be built no earlier than 2012, said Yawen Hsiao, a company spokeswoman. The United Daily News reported the postponement yesterday, citing Chairman K.Y. Lee.

The delay by Hsinchu-based AU comes as clients such as Sony Corp. cut profit forecasts on slumping demand. Sony, the world’s second-largest consumer-electronics maker, said this week it will eliminate 16,000 jobs as part of plans to save 100 billion yen in annual costs, after trimming its net income forecast by 38 percent in October.

Taiwan’s Cabinet said Sept. 21 AU will build two 10th- generation and two 11th-generation factories at the Erlin site. The company hasn’t decided on construction plans for these plants, Hsiao said.

Plans aren’t finalized because Erlin will be the company’s long-term production site with projects based on a 10-year timeline, she said.

Generation designations refer to the size of the glass sheets produced. Later generations make larger screens, allowing more panels to be cut from each sheet.

Elpida To Redeem Convertible Bonds

2008-12-12T06:40:00.001-02:00

The Wall Street Journal - 12/12/08

TOKYO -- Elpida Memory Inc. said Thursday it will redeem recently issued convertible bonds worth 50 billion yen ($539.8 million), raising concerns over how the memory-chip maker will finance future capital investment.

The decision came after Elpida's share price closed below the minimum conversion level of 509 yen for the 20th straight session.

Japan's sole maker of dynamic random access memory chips had structured the convertible bond issue last month in a way that if its share price closed below 509 yen for 20 consecutive sessions, it would have to redeem all of the bonds.

Elpida shares ended down 8.9% at 420 yen Thursday.

One fund manager at a U.S. asset management firm said that short-term investors, such as day traders, were making a quick profit amid recent high volatility in Elpida's shares, but long-term investors were staying away from the stock.

While redemption of the convertible bonds eliminates share-dilution worries, fundamental concerns remain as Elpida continues to face tough challenges amid a supply glut and falling DRAM prices, analysts say.

As the bonds were meant to raise funds for capital investment for the next fiscal year starting April, Elpida will now have to seek other ways to raise capital.

The company needs the funds to invest in new technology and plants to manufacture DRAM chips, which are used in personal computers and mobile phones.

In November, the company said it has decided to delay the planned start up of chip production at its joint venture in China with Suzhou Venture Group Co. The joint venture was originally scheduled to start operations in early 2010.

Sales Of Flat-Screen PC Monitors Set To Shrink

2008-12-12T00:27:00.001-02:00

Financial Times - 10/12/08

Global sales of flat-screen computer monitors are almost certain to fall next year for the first time since they were invented, according to analysts and industry leaders, in a sign of how hard the economic downturn is hitting consumer sentiment in the US and Europe.

Industry leaders say the likely contraction next year is unprecedented.

Although flat-screen makers have endured tough times before, particularly when the tech bubble burst in 2001, volumes still rose.

This downturn will be “unique,” according to KY Lee, chairman of AU Optronics of Taiwan, the third-biggest producer after South Korea’s Samsung Electronics and LG Electronics.

Frank Wang, analyst at Morgan Stanley, said the industry faced “the worst ever market situation”.

Companies and consumers began replacing bulky cathode ray tube monitors with flat-panel liquid crystal display screens after their invention in the mid-1990s.

That spawned a global industry of companies producing tens of millions of flat screens a year, from 65in televisions to one-and-a-half-inch screens for mobile phones.

But next year worldwide sales of flat-screen PC monitors are likely to shrink about 3 per cent to 160.6m, according to WitsView, a Taipei-based research consultancy.

In an interview with the Financial Times, Mr Lee said: “When we entered this industry 12 years ago it was booming.

“It was growing so fast the only problem was caused by supply-side issues,” he said, referring to the over-expansion of capacity, which drove down prices.

“But this time, the issue has happened on the demand side, caused by the financial crisis globally.”

Henry Wang, general manager of WitsView, said that, in addition to the collapse of consumer sentiment, many people had in any case already replaced their cathode ray tube monitors with flat screens.

“This time around, the penetration rate is already very high so you cannot count on demand to pick up again,” he said.

However, Mr Lee said that future demand for flat screens could be spurred as manufacturers moved to offer a wider range of applications.

Seoul Considers State Funding Aid For Hynix

2008-12-10T04:53:00.001-02:00

Financial Times - 09/12/08

South Korea may consider helping Hynix Semiconductor with funding if creditors for the troubled chipmaker decide not to provide it with financial support.

Hynix, which like other chipmakers is feeling the impact of oversupply and falling prices, has faced mounting concerns about its future in recent weeks. The company reported a Won1,650bn ($1.14bn) net loss in the third quarter, its biggest quarterly loss in at least seven years,

Yesterday Lee Youn-ho, South Korea's minister of knowledge and economy, said that creditors had almost agreed on support measures for the world's second largest chipmaker.

"At the moment, the government is not considering direct support [for Hynix] because shareholders have agreed on providing liquidity to some extent," Mr Lee told foreign correspondents. "But if creditors can't help out Hynix, then the government may look into it."

Korea Exchange Bank, Hynix's main creditor, was more cautious, saying that creditors were still reviewing Hynix's request for Won500bn-Won1,000bn of financial support. Creditors including KEB, state-run Korea Development Bank, Woori Bank and Shinhan Bank own a combined 36 per cent stake in Hynix. They bailed out the chipmaker through several debt-toequity swaps in 2001, when the company was pushed to the brink of bankruptcy.

Yesterday's comments came after Hynix announced over the weekend a tough restructuring plan to cut its workforce and reduce pay for its executives. Hynix plans to cut the number of executives by 30 per cent and trim their pay by 10-30 per cent as part of efforts to survive one of the industry's most severe downturns.

The company will also introduce a voluntary retirement programme for workers with more than 10 years' experience and ask all of its employees to take a two-week, no-pay leave on rotation from January to April.

Hynix, which has about 22,000 staff including 96 executives, expects the cuts to reduce its wage bill by more than 15 per cent.

"The semiconductor market remains bad and if this downturn persists through the end of next year, we could be in trouble. So we need a contingency plan in case of a protracted slump," said James Kim, vice-president at Hynix.

Hynix had Won1,200bn in cash reserves as of end-September. It plans to keep its capital expenditure for next year at Won1,000bn-Won2,000bn, compared with Won2,600bn for this year. But its chief executive said last week that the company would still report a profit for the year and forecast the global chip market would hit the bottom in the first quarter of next year.

Market researcher iSuppli, however, expects Hynix to report a 29 per cent drop in 2008 revenue, the biggest drop among leading chip manufacturers.

IBM Creates "Microsoft Free" PC

2008-12-05T07:10:00.002-02:00

The Wall Street Journal - 05/12/08

International Business Machines Corp. is hoping to convince corporate customers that they no longer need Microsoft Corp.

IBM says it has created a "Microsoft-free" virtual desktop -- a complete suite of applications that run on a backroom server and don't require Microsoft software or costly desktop hardware.

The software package, available immediately, uses the Linux operating system and a set of IBM office applications that can be displayed on so-called thin clients, which don't have processing units or hard drives.

IBM, based in Armonk, N.Y., says pricing for the Virtual Linux Desktop would range from $59 to $289 per user, depending on what software and service level the customer chose.

IBM estimates that a corporate customer licensing the software would save $500 to $800 a year per user, compared with buying a license for Microsoft's Vista operating system, Office suite and collaboration tools.

Microsoft declined to comment.

A single back-office server running the IBM suite can run dozens of so-called virtual PCs. Workers' desks would still have a keyboard and a screen. Each worker also would be connected to the network through either a thin client, typically costing under $200, or an old PC that functions as one, also known as a dumb terminal.

IBM says that compared with a powerful PC that runs Vista, each virtual PC could save $250 in hardware costs and between $60 and $220 a year on electricity and air conditioning.

Keeping the software on central computers also makes it easier to repair and upgrade.

"Deploying your technology this way is going to save you something more than 50% of your total costs," says Jeff Smith, IBM's vice president for open source and Linux. "As customers face an increasingly challenging economic situation, they're looking at everything they're spending money on."

Computer companies have been promoting thin clients as an alternative to PCs for years -- with little success. But Mr. Smith says open-source software has caught up to most of the functions of Microsoft Office and that cost-cutting has become a much bigger priority for many corporate computer managers.

Al Gillen, an analyst with IDC Corp., a market researcher in Framingham, Mass., says only "a minority" of customers will want a Linux solution because of compatibility issues with other corporate users.

But Natalie Lambert, an analyst with Forrester Research, says that "interest in desktop virtualization is huge."

Besides cutting costs, she says, computer buyers like that data isn't stored on PCs, where it is easier to steal. She says some companies are starting to look at virtualizing most of their personal computing and predicts they will start deploying it in certain locations like call centers or offshore facilities.

IBM's software package comes with virtualization software from Virtual Bridges Inc. of Austin, Texas, and Ubuntu Linux from Canonical Ltd. in London.

Dell's Revival Strategy Runs Into Trouble

2008-12-03T08:08:00.003-02:00

The Wall Street Journal - 02/12/08

Michael Dell's plan to fix the company he founded, Dell Inc. -- once the biggest personal-computer maker in the world -- is stalling.

Dell reported falling revenue and shrinking profits last week for its most recent quarter. And while profit margins grew, the gains resulted from painful cost cuts, including massive layoffs and decisions not to invest in launching products like portable music players and cellphones -- the kinds of gadgets Mr. Dell had described previously as building "brand lust."

By contrast, Dell's main rival, Hewlett-Packard Co., on Monday announced increased quarterly sales and a 10% jump in PC revenue from last year.

Mr. Dell, who famously founded his company in a University of Texas dorm room, once ruled the PC market with a simple strategy: Build reliable desktop PCs, and sell directly to customers over the phone or online, cutting out the middleman.

When he left Dell in 2004, it sold more PCs in the U.S. than its four closest rivals combined, according to the analysis firm Gartner. Back then, H-P was struggling in second place.

Now the tables are turned. Dell's core business of selling desktop PCs directly to companies keeps slowing, and it has lagged behind H-P and others in adapting to the growing popularity of consumer laptops -- which people would rather buy in stores, where they can try them out.

Dell's challenges are testament to the rapidly changing global gadget business. The rise of notebooks, tiny "netbooks" and smartphones such as Apple's iPhone is forcing PC makers to rethink the very definition of a "personal computer."

At the same time, Dell has lost its low-cost edge as its rivals shifted to using Asian factories-for-hire to build their wares. Today, many of Dell's own factories, such as one in North Carolina that's only about three years old, can no longer compete on cost.

Dell is trying to sell off some plants. But in October, tech-industry analysis firm iSuppli suggested that Dell may actually have to pay other companies to take them.

In an interview earlier this year, Mr. Dell acknowledged the frustration with the slow pace of his turnaround. "Everything takes longer than I've expected, than I'd like it to take," he said.

Mr. Dell has made some significant progress. Despite recent weak sales, the company's operating profit is up thanks to a nearly two-year cost-cutting effort. That resulted in higher profit margins than last year, beating analysts' earnings predictions. Dell has almost 10,000 fewer employees than a year ago.

Dell has also released more new products this year than in past years, and has boosted sales and profits in its consumer division -- the fastest-growing segment of the PC market, and historically a Dell weak spot.

Its quarterly earnings per share of 37 cents beat analysts' estimate of 31 cents. The company's expenses were down 11% from last year.

Dell shares have bounced back in recent days, but are still trading at about $11, down from a 52-week high of more than $28.

A Dell spokesman referred questions about its turnaround plan to statements made during last week's earnings conference call. During that call, Mr. Dell and the company's chief finance officer, Brian Gladden, pointed out that Dell has succeeded in making international sales, as well as higher-profit items like corporate server computers, a bigger part of revenue.

The two also blamed sales declines on the weak economy, which is slamming the entire tech industry. In recent weeks, H-P and Cisco Systems Inc. have announced cost cuts.

Mr. Dell, 43, returned to the company as chief executive in early 2007 with a two-pronged rescue plan: Cut costs in the thin-profit PC business, and invest in new areas, including not only music players and new portable devices, but also "business services" such as running corporate in-house networks.

Now, Mr. Dell's dual aims -- cutting at the low end, while pushing new high-end gear and services -- are in conflict. Dell's slim profit margins make it tough to invest heavily in R&D even in good times.

A Dell spokesman says that investing in new products and slashing costs "aren't mutually exclusive."

The impact of the economic downturn is particularly clear in corporate sales, Dell's single biggest business, which generated about 80% percent of revenue the past year. After posting annual unit increases of 12% or more each quarter for the past year, commercial shipments dropped 5% in the most recent quarter, and revenue declined 6%. For years, commercial PCs had been a reliable growth source for the industry.

Partly due to the weakening tech market, Dell this fall killed plans to sell a portable music player, even though it was already testing prototypes, say people familiar with the matter. It's also backing away from tentative plans to design a mobile phone, say people briefed on the business.

A spokesman declined to comment on Dell's phone plans. Earlier this year, Mr. Dell said the company continues to consider the phone business, but has no imminent plans to enter it.

In its heyday, Dell boasted industry-leading profit margins and assembly system so efficient that it was the subject of scholarly papers. Dell today is in a "squeeze play," says Paul Argenti, a professor at Dartmouth College's Tuck School of Business who has studied the company.

On one side are low-cost Asian PC makers, while at the other is Apple, which commands premium prices that help fund R&D. But while the challenges are formidable, Mr. Dell is "enormously talented" and is capable of formulating a new strategy, Mr. Argenti said.

Mr. Dell, who remained chairman during his three years away from the CEO's office, stays closely connected with product development. He fires off late-night e-mails asking about individual components in new PCs, colleagues say. And Mr. Dell says he routinely dismantles rivals' PCs in a room in his Austin, Texas, home.

H-P has a significant advantage over Dell. Its highly profitable printer business and business-services division are far bigger than Dell's. This has helped insulate H-P from PC-market weakness. PCs are about 35% of H-P's revenue; they're about 60% of Dell's.

H-P has continued to beat Dell in PC sales. Last month, analysis firm IDC reported that H-P remained the world's largest PC maker in this year's third quarter. Its shipments increased 14.9% compared to the year-earlier period. Dell increased shipments only 11.4%.

On Monday, H-P announced a gain in quarterly revenue.

Dell's disadvantage is magnified by falling PC prices. For the quarter ended Aug. 1, it reported a 17% annual drop in profits largely because a European division cut prices to chase large corporate deals, said a person familiar with the matter.

In the recent earnings call, Mr. Dell said the company has decided to keep profit margins up, rather than lower prices to spur growth.

Dell's fortunes looked much better four years ago, when Mr. Dell left the CEO post. The low-cost business model of selling PCs directly to customers had propelled 2004 sales above $40 billion. But growth stalled in 2006.

A big factor: H-P found Dell's weak spot by focusing its sales on retail stores, where Dell had no presence.

Mr. Dell took back the reins from then-CEO Kevin Rollins in early 2007, pronouncing his old business model dead. After his return, he announced the company would start selling in stores.

Today, Dell needs to worry about retail sales cannibalizing its higher-profit direct sales. An executive at Best Buy Co. said recently in an interview that it expects its sales of Dell PCs to take away from Dell's direct sales.

Dell doesn't report retail profits, but profit margins there remain slim, analysts say.

A Dell spokesman said that "retail has actually enhanced the online business," since it has raised Dell's profile with consumers.

Mr. Dell also focused on the consumer-laptop business, which by that time suffered from a troubled reputation. For instance, tech blogs had a field day after Dell and a few other manufacturers' notebooks caught fire due to battery problems. Dell recalled the faulty batteries, which it hadn't manufactured.

Mr. Dell hired top executives from outside the company to push into new markets and cut costs. Mobile technology was also to be a promising new foray, since smartphones have recently been a sweet spot of computer growth.

Mr. Dell brought in Motorola Inc. veteran Ron Garriques to run the new consumer division. "The phone is a very different animal for us," said Tim Mattox, Dell's strategy chief, in an interview earlier this year. "It's one of the reasons we brought in Ron."

Mr. Garriques set up a Chicago office, hiring ex-Motorola employees to develop portable devices, including mini-notebook PCs. In August 2007, Dell acquired Zing Inc., a company founded by an Apple veteran that develops portable music players and software. Dell said it planned to release a Zing music player this year, along with Zing software.

Mr. Dell paid close attention to the consumer division. "I'll come down from a meeting, and he'll be in my cubicle," Mr. Garriques said in an interview earlier this year. "Michael knows no boundaries."

Early this year, Dell executives discussed entering the phone market in 2009, said people briefed on the matter. But it has held back due to cost and the uncertain market, they say.

A Dell spokesman declined to comment on the company's phone plans.

Dell has pushed into the hot market for netbooks -- small, low-power laptops designed mainly for internet access. However, netbooks have thin profit margins and sell for as little as $350.

Meanwhile, H-P this year introduced a line of two consumer-oriented smartphones in Europe. It also beat Dell into the netbook market.

Dell's biggest transformation may be in manufacturing, which was narrowly tailored to its original direct-sales strategy. The company eschewed inventory, and its famously efficient factories quickly assembled build-to-order PCs. Plants were often located in local markets to speed up delivery times.

But Dell stuck to that approach too long, opening new plants in the U.S. while rivals like Apple and H-P shifted to Asia.

At a conference in Switzerland early last year, Mr. Dell approached Mike Cannon, a former CEO of a contract manufacturer. On a plane back to the U.S., Mr. Dell told Mr. Cannon that Dell "needs a lot of help," Mr. Cannon recalled earlier this year. Shortly after, he was hired as Dell's operations chief.

Mr. Cannon soon began efforts to outsource Dell's manufacturing to Asia and to start the process of selling off factories.

On a conference call with analysts Thursday, Mr. Dell said his leadership team has laid "important foundations that position us to be a stronger and more nimble company."

Canon Clear To Launch New Type Of TV

2008-12-03T06:06:00.002-02:00

Financial Times - 02/12/08

Canon, the Japanese consumer electronics group, is clear to launch a new type of television after winning a patent lawsuit that has delayed its progress for more than three years.

Nasdaq-listed Applied Nanotech, which had sued the Japanese company for illegally sub-licensing its patents, told the Financial Times that it had decided not to appeal to the US Supreme Court.

"It would probably be a futile effort,” said Douglas Baker, Applied Nanotech’s chief financial officer.

Canon can now press ahead with televisions based on surface-conduction electron-emitter displays, or SED.

Such TVs can produce the wide viewing angle and deep colours of a traditional cathode-ray television, but are as thin as a liquid-crystal or plasma display.

SED is a rival technology to organic light-emitting diodes, or OLEDs, a system backed by Sony and Samsung, and could shake up the huge market for televisions and monitors. Canon showed SED prototypes in 2006, but has yet to prove that it can mass produce televisions at a competitive price.

Tsuneji Uchida, Canon’s president, told the FT: “In regards to SED, we have a new production process we’re working on which is cost competitive with liquid crystal displays.”

Canon sees displays as a natural complement to its existing business of cameras, printers and copiers.

But he implied that SED would not be launched immediately because of the slump in television prices that has prompted profit warnings from Sony and Panasonic. “At times like this, new display products are not introduced much because people would laugh at them,” he said.

Applied Nanotech first filed a suit in April 2005, alleging that, although it had licensed crucial SED patents to Canon, they did not cover a joint venture Canon formed with Toshiba to commercialise the technology.

In May 2007, a court ruled that Canon had breached the licence but in July this year an appeals court reversed the ruling on a technicality.

SED technology has suffered heavily from the three-year delay caused by the lawsuit. Canon was forced to buy Toshiba out of their joint venture and the two companies abandoned plans to launch products in the fourth quarter of 2007, partly because of the lawsuit and partly because manufacturing costs were still too high.

In the meantime, LCD and plasma displays have moved into the mass market, and economies of scale have made them cheaper to produce.

Qimonda Attempts To Forestall Cash Crisis

2008-12-03T06:00:00.002-02:00

Financial Times - 02/12/08

Qimonda, the German computer chipmaker,on Monday warned it might run out of money early next year if it failed to secure help from one of a number of potential investors with which it is negotiating different forms of partnership.

However, the company, which employs 13,500 people worldwide, said it was “making progress” in talks with possible strategic and financial backers and that executives believed it would be able to announce a deal “in the next few weeks”.

People familiar with the talks said options being weighed included a loan guarantee from the federal government and the state of Saxony – in whose capital, Dresden, Qimonda has a big plant – or even the state buying an equity stake.

Qimonda’s cash position shrank to €432m ($546m) from €707m in the past year as it suffered from stiff competition in the market. It saw this trend increase as the credit crunch put the brakes on economic growth over the past few weeks.

The company said it was postponing the release of data for its 2008 financial year from today until later in the month, although it signalled its operating loss would nudge €2bn on sales of about €1.8bn in the year ending September 30.

While sales in the last quarter of that period rose 24 per cent in annual comparison to €476m, Qimonda said operating losses would be larger than the €386m shortfall in the third quarter, further enlarging a nine-month deficit of €1.4bn.

Should it fail to find new investors, the situation on the chip market remain bad and cost cuts fail to bite, Qimonda warned it would “face liquidity shortfalls in portions of its operations” between early January and late March of next year.

Qimonda’s woes are weighing on parent and speciality chipmaker Infineon which holds 77.5 per cent in the memory chipmaker. It wants to reduce its stake to below 50 per cent – although it has balked at selling to US rival Micron.

Thomas Jurk, Saxony’s trade and industry minister, has signalled his aim to maintain chip production in Dresden – Qimonda, Infineon and AMD all have factories there – although the European Union would have to sign off on any package.

The Saxon trade and industry ministry said Qimonda would need a restructuring plan before Mr Jurk decided what to do: “If we decide to help, all instruments like loans and guarantees are possible.”

A decision could come before Christmas.

Japan's Elpida Memory Inc. To Take Controlling Stake In Rexchip Venture

2008-11-28T07:32:00.003-02:00

The China Post - 28/11/08

TAIPEI, Taiwan -- Elpida Memory Inc., Japan’s biggest memory-chip maker, plans to boost its holding in a production venture with Taiwan’s Powerchip Semiconductor Corp. to gain control of the operation. Elpida will buy 94 million shares from its venture partner, increasing its stake in Rexchip Electronics Corp. to 52 percent, Hsinchu-based Powerchip said an e-mailed statement yesterday. The latest purchase will raise Elpida’s investment by 3.2 percent, the Tokyo-based chipmaker said in a separate statement. Financial details weren’t disclosed.

The investment will boost Elpida’s production capacity and give it control of a factory that runs on the latest technology for making computer-memory chips at a fraction of the cost of building a plant. Elpida and Powerchip each own 48.8 percent of Rexchip at present, Eric Tang, spokesman for Powerchip and the venture, said by phone earlier yesterday.

Powerchip, Taiwan’s largest maker of computer-memory chips, has lost 79 percent of its market value this year, while Elpida shares have slumped 88 percent.

Elpida climbed 10 percent to close at 475 yen on the Tokyo Stock Exchange, while Powerchip jumped 6.6 percent, its daily limit, to close at NT$2.89 in Taipei trading.

Elpida and Powerchip set up Rexchip in 2007, with plans to invest 1.6 trillion yen in production. The Japanese chipmaker said Nov. 6 that it is considering making Taichung, Taiwan-based Rexchip a subsidiary.

Elpida may expand its alliance with Powerchip, including through a possible capital tie-up, it said.

H-P Maintains Positive Outlook

2008-11-26T00:46:00.002-02:00

The Wall Street Journal - 26/11/08

Hewlett-Packard Co. said the economic slowdown will be challenging for the technology provider, but Chief Executive Mark Hurd said it expects to emerge from the turmoil in a stronger competitive position.

Hurd's comments came as the Palo Alto, Calif., company reported fiscal fourth-quarter earnings that exceeded Wall Street forecasts. The results were expected after H-P last week made an early announcement of favorable earnings, a rare occurrence during a time when other technology companies are increasingly feeling the effects of the global slowdown.

"Our intention is to get through this period without losing any muscle in the organization," Mr. Hurd said in a conference call.

Strong sales of notebook computers and the acquisition of Electronic Data Systems were among the biggest boosts to H-P's results in its quarter ended Oct. 31. H-P acquired EDS this year for $13.25 billion to strengthen its position in the technology-services market.

Revenue rose 19% to $33.6 billion from $28.29 billion in the same period a year earlier. Excluding EDS, revenue grew 5%.

H-P's net income for the quarter was $2.11 billion, or 84 cents a share, down from $2.16 billion, or 81 cents a share, a year earlier. Excluding restructuring charges, acquisition-related charges and other items, the company earned $1.03 a share -- better than the $1.01 that analysts, on average, had expected, according to Thomson Reuters.

Analysts said the results reflect Mr. Hurd's focus on containing costs. H-P has said it is cutting more than 24,000 workers due to the integration of EDS. Executives said Monday they expected to trim more than $1 billion in costs during fiscal 2009.

Mr. Hurd struck a cautious tone in describing the economic outlook, saying conditions could further weaken spending on information technology. He added the company would seek to keep earnings strong by continuing to cut costs, a major initiative for Mr. Hurd since he took over at the company in 2005.

Chunghwa Picture Mulling Options To Shut LCD Factory

2008-11-25T06:25:00.001-02:00

The China Post - 25/11/08

TAIPEI, Taiwan -- Chunghwa Picture Tubes Ltd., Taiwan’s fourth-biggest maker of liquid-crystal displays, may consider closing one of its factories in Taiwan to cut costs after posting its first loss in six quarters. “All our factories are not operating at a full capacity, and it will be more cost efficient if we can consolidate our production,” James Wu, chief financial officer of the Taoyuan, Taiwan-based company, said by phone yesterday.

The LCD maker runs one so-called sixth-generation factory and two 4.5 generation plants in Taiwan. It may shut one 4.5G facility that makes screens for LCD monitors, laptop computers and televisions, Wu said.

Chunghwa Picture last month reported a loss of NT$6.08 billion for the three months ended Sept. 30, compared with a NT$5.11 billion profit a year earlier.

The 4.5G plant employs about 1,000 people, Wu said, declining to say if they would be retained if the plant was shut down.

Dell's Profit Slumps 5% As Business Pull Back

2008-11-24T09:11:00.002-02:00

The Wall Street Journal - 24/11/08

Dell Inc., struggling to weather the economic slowdown amid efforts to turn itself around, posted a 5% drop in net income and a 3% decline in revenue for its fiscal third quarter.

The No. 2 personal computer maker by revenue has faced a pullback in spending from both businesses and consumers, especially in October. On Thursday, Dell executives cautioned they expect the challenging environment will persist.

"We're seeing global implications, and slowing in almost all of the businesses we are in," said Dell Chief Financial Officer Brian Gladden. He said the company was able to cut costs and boost profit margins despite the bad economy.

The revenue decline -- Dell's first year-over-year drop since the beginning of 2007 -- wasn't a surprise. In September, the company said it was seeing weakness in corporate PC spending. Still, Dell's revenue missed a consensus of analyst estimates by about $1 billion.

"Cost cutting efforts helped offset falling revenue growth," said Bill Kreher, an analyst at Edward Jones. One troubling sign, he added, was Dell's revenue in laptop computers, which grew less than 3%; he said laptop growth was expected to be more robust.

But after weeks of lowered expectations and bearish projections, Dell cleared a low bar: Its earnings beat subdued Wall Street forecasts, thanks to cost cuts and share buybacks. That sent Dell's shares up 5% in late trading to $10.30, after closing down 5% in 4 p.m. trading on the Nasdaq Stock Market.

Dell's earnings report comes two days after rival Hewlett-Packard Co. surprised Wall Street by preannouncing a better-than-expected profit for its fiscal fourth quarter.

Dell gets about 60% of its revenue from PCs, while H-P gets about a third of its revenue from PCs. That puts Dell in a difficult spot since a slowdown in the PC market is spreading quickly. On Thursday, research firm iSuppli Corp. lowered its PC growth predictions for next year and 2010, citing "rapidly deteriorating conditions in the global economy." ISuppli cut its 2009 PC unit growth projection to 4.3% from 11.9%.

For its quarter ended Oct. 31, Dell reported net income of $727 million, down from $766 million a year ago. Revenue was $15.16 billion, down from $15.65 billion a year ago. But Dell earned 37 cents a share last quarter, up from 34 cents a share a year earlier.

Dell's results are the latest inconsistent performance from the company. Once the world's largest PC maker, Dell faltered in 2006 as PC growth shifted from business to consumer PCs, where H-P had an advantage. Founder Michael Dell returned as CEO early last year after a three-year hiatus and installed new executives and moved Dell into new business areas like retail PC sales.

Dell has also been remaking its production process, increasingly relying on Asian contract manufacturers to build its computers. The company has also been trying to sell some of the factories it owns, say people briefed on the matter, and has laid off about 9,000 workers in the past year as part of a cost-cutting effort.

There were some bright spots in the quarter. Dell's consumer division saw operating income of $112 million, up from a loss a year ago. The company also posted operating profit of $123 million in commercial sales in Asia, up from $76 million last year.

HP's Forecast Helps To Calm Wall St Nerves

2008-11-20T06:50:00.002-02:00

Financial Times - 19/11/08

Shares in Hewlett-Packard rose 14.5 per cent yesterday as the technology industry's main bellwether preannounced earnings and issued a forecast for next year that helped to calm recent frayed nerves on Wall Street.

The news comes in the face of an expected 2009 recession in the PC business, where HP is the market leader, and amid signs that some other big suppliers of corporate IT have already started to see a collapse in demand.

Mark Hurd, chief executive, put HP's resilience down to its "global reach, diverse customer base, broad portfolio and numerous cost initiatives".

HP had been due to announce its latest earnings for the three months to the end of October on Monday, but brought the news forward after a slide that had wiped 23 per cent off its share price over the previous two weeks.

Recent news from Cisco Systems and Sun Microsystems, among others, has pointed to a sharp drop in corporate demand for technology in October, and HP's exposure to consumers through its PC and printers businesses has come to be seen as less of a hedge.

Investors have also come to view the company's international reach as less of a support next year as the economic malaise spreads from the US to other parts of the world, and as the stronger dollar eats into its reported numbers.

Yesterday, HP warned that the strength of the dollar would wipe 6-7 percentage points from its revenue growth rate next year.

Despite that, HP's revenues and earnings held up through to the end of October, the end of its fiscal year, and the company gave a strong earnings forecast for its current fiscal year.

HP said that revenues next year were likely to reach $127.5bn-$130bn, below the $135bn consensus view on Wall Street, reflecting the strength of the dollar and pressure on demand. However, it also predicted that pro-forma earnings per share would reach $3.88-$4.03, ahead of the $3.85 that analysts had predicted.

Mr Hurd, who won over Wall Street after bringing a must stronger operational discipline to Silicon Valley's most disparate technology conglomerate, has pinned his targets for the coming year largely on his ability to squeeze out costs following the acquisition of EDS, an IT services company. The EDS integration, along with the effects of a price increase in supplies for its printers and other cost reductions, should be enough to offset what otherwise would have been a 15-20 per cent decline in operating income, according to a note from Richard Gardner, an analyst at Citigroup.

For the latest quarter, HP put its revenues at $33.6bn, reflecting 5 per cent growth before the acquisition of EDS, with pro-forma earnings per share of $1.03.

Hewlett-Packard Surges After Profit Estimates

2008-11-20T06:35:00.000-02:00

The China Post - 20/11/08

NEW YORK -- Hewlett-Packard Co. rose the most in seven years in New York trading after posting profit that beat analysts’ estimates and forecasting growth in 2009, signaling that the personal-computer maker will withstand a global slump. Fourth-quarter earnings were US$1.03 a share, excluding some costs, Hewlett-Packard said today. That beat the US$1 average of projections compiled by Bloomberg. Profit in the next fiscal year will advance to between US$3.88 and US$4.03, with the midpoint of that range surpassing estimates

Quanta To Make Acquisitions Next Year

2008-11-20T06:27:00.001-02:00

The China Post - 20/11/08

TAIPEI, Taiwan -- Quanta Computer Inc., the world’s largest contract manufacturer of notebook computers, plans to step up acquisitions next year to expand into new product areas and take advantage of falling stock prices. “Medical devices and automobile electronics look to be good areas to move into,” Tim Li, chief financial officer for the Taoyuan, Taiwan-based company said in a phone interview late yesterday. “Next year will be the perfect year for mergers and acquisitions.”

Quanta, which gets 88 percent of its sales from making laptops for clients such as Apple Inc. and Acer Inc., is seeking to broaden its product range.

The company also wants to acquire suppliers such as makers of electronic components and materials, Li said, without naming companies or saying how much it may spend.

In March, Quanta bought a 17 percent stake in Kontron Asia Inc., a maker of industrial computers, and is a minority shareholder in Simplo Technology Co., the world’s largest maker of notebook battery packs.

Separately, Quanta has no plans to reduce staff, cut salaries, or freeze hiring amid a global economic recession, Li said. AU Optronics Corp., Taiwan’s largest maker of liquid- crystal displays in which Quanta is a shareholder, said yesterday it will cut executive salaries by up to 15 percent to save costs.

H-P Gives Upbeat Outlook For Quarter Despite PC Gloom

2008-11-19T09:18:00.003-02:00

The Wall Street Journal - 19/11/08

Mark Hurd's focus on cost cutting helped turn around Hewlett-Packard Co. when the economy was strong. Now with the economy slumping, H-P's chief executive is relying on the same strategy to keep profits up.

The technology giant Tuesday surprised Wall Street with an early announcement of better-than-expected earnings for its most recent quarter -- one of the few tech companies to unveil positive numbers in the past few weeks.
H-P, the world's biggest maker of PCs by revenue, also forecast improved profit next year, even as it projected revenue will be lower than analysts' estimates, an indication the company will continue its aggressive cost cuts.

The news sent the company's battered shares up about 14%, or $4.25, to $33.59 on the New York Stock Exchange Tuesday.

"What they intend to do is manage costs," said Shebly Seyrafi, an analyst at Calyon Securities. "This isn't about impressing people with revenue."

When Mr. Hurd took over H-P in 2005, the Palo Alto, Calif.-based company was bloated and losing money in its PC business. But Mr. Hurd moved quickly to slash jobs and real estate expenses. In the wake of those cuts, H-P's shares soared from around $20 when he took over to above $50 late last year.

In recent months, however, H-P shares have dropped along with the rest of the market amid investor concerns about corporate tech spending and falling PC prices. The outlook for the tech sector grew more bleak last week, when chip maker Intel Corp. said revenue for the current quarter would be disappointing.

H-P's update came just one day after its shares hit a two-year low. It also came as rival PC maker Dell Inc. is set to report Thursday what analysts predict will be poor sales. H-P will report its full quarterly results next week.

In a prepared statement, Mr. Hurd credited H-P's "ability to execute in a challenging marketplace." An H-P spokeswoman said the company wouldn't comment further until Monday, when it will have a conference call to discuss its results.

Overall, the company said revenue in its fiscal fourth quarter ended Oct. 31 rose 19% to $33.6 billion, with earnings per share totaling 84 cents, up 4% from last year. Revenue rose 5% excluding sales from Electronic Data Systems Corp., a tech-services company that H-P acquired earlier this year for $13.25 billion.

H-P did not detail the performance of the separate parts of its business, which in addition to PCs includes printers and printing supplies, IT outsourcing services and business software.

H-P also projected fiscal 2009 per-share earnings of $3.88 to $4.04 on revenue of $127.5 billion to $130 billion. Analysts were expecting earnings of $3.85 a share on revenue of $135.06 billion, according to Thomson Reuters.

H-P has recently signaled its cost cutting is continuing. It has offered buyouts to workers in its printer division over the past year, and last week, H-P told workers it would shut down during the holidays for two weeks instead of one week to save money. The company is also cutting more than 24,000 workers as part of the integration of EDS.

For the October quarter, Wall Street attributed H-P's results to its diversified portfolio of products. In addition, H-P makes about two thirds of its revenue from outside the U.S. and is less dependent than some competitors on the slumping domestic economy.

H-P "has the product diversity and the geographic diversity and the cost-cutting options at its disposal, to give it plenty of cushion to handle the headwinds we're going to face," says Needham & Co. analyst Richard Kugele.

Still, some analysts pointed to H-P's lighter-than-expected revenue forecast as an indication that a slowdown in PC sales will continue. That could also be troubling for Dell, the world's second-largest PC maker after H-P.

Several analysts have lowered their expectations for Dell in recent weeks. A Dell spokesman declined to comment citing the company's quiet period leading up to Thursday's earnings, but referred to a statement the company made in September that it saw weakening in business spending.

Debt Loom At Taiwan Chip Firms

2008-11-19T09:02:00.002-02:00

The Wall Street Journal - 19/11/08

Taiwan's memory chip makers have a convertible debt problem.

The industry went on a borrowing binge, using funds to build new facilities and ramp up production. But in so doing sowed the seeds of an industry crisis that has been unfolding over the past two years.

A glut in memory chips used in everything from mobile phones to laptop computers, just as demand for the products has fallen off a cliff, means memory chip prices are down as much as 90% since the end of 2006. To little avail, chip makers have been slashing production and halting investment.

Now the debt itself is coming due -- just when the chip makers need what little cash they have left.

Taiwan's government has offered some relief by pushing back the due date on bank loans, totaling about $12.7 billion for the four biggest companies: Powerchip Semiconductor, Nanya Technology, Inotera Memories, and ProMOS Technologies. But it may have little say when investors cash out of convertible bonds that are also due in the months ahead.

Just over $1 billion is owed by three of the big chip makers on convertible debt due in the next two years, according to data from Dealogic. That's not counting what investors have the option to ask for repayment on, which they may or may not choose to do.

What the companies can't count on is investors' interest in converting the bonds into stock, or being able to tap credit markets for a means of financing. That means they'll have to pony up the money.

In the most precarious situation is ProMOS, which ended the third quarter with about $76 million in cash, a third of what it started the year with. Investors in a $350 million convertible bond issued by ProMOS in 2007 will be able to start selling the bond back to the company in February, although it isn't due until 2012. The company has another $225 million bond due in June 2010, according to Dealogic.

The company declined to say what it plans to do about the situation.

Only Inotera doesn't have any convertible debt to pay back. Nanya has a $304 million bond that investors can start putting back to the company later this month (it matures in November 2011), and a $220 million bond maturing in February, and Powerchip a $158 million bond due in June. Both have substantially more cash on hand, and alliances with foreign chip-makers which might lend a hand. Not that they don't have their own problems to worry about.

Corning Trims Forecast Amid Weak LCD Demand

2008-11-19T08:50:00.002-02:00

The Wall Street Journal - 19/11/08

Shares of Corning Inc. hit a five-year low at one point Tuesday, after the company said demand for its liquid-crystal-display glass was dropping so fast that it couldn't predict results for the fourth quarter and for next year.

The Corning, N.Y., manufacturer of glass and ceramic products derives almost all of its profit from making sheets of ultra-refined glass used as liquid crystal displays in flat-panel television sets and computers.

Corning's shares fell 6.9% to $8.39 at 4 p.m. in composite trading on the New York Stock Exchange. Earlier Tuesday, they hit a low of $7.61, where they haven't traded since 2003.

Corning's chief financial officer, Jim Flaws, said the company still expects fourth-quarter unit sales of products containing LCD glass to rise 10% from a year earlier. But this is down from the 20% growth the industry was expecting. Corning has idled production lines and announced 385 layoffs as panel makers slash purchases to conserve cash and clear out inventory.

"Our customers are buying less than they are selling," Mr. Flaws said. "It's hard to determine how much is due to the credit crunch, where they can't finance what they'd like, and how much is that they don't need as much inventory due to declining consumer demand."

The glass and fiber-optics maker teetered on the verge of filing for bankruptcy-court protection after the dot-com meltdown but has since moved to strengthen its finances. It now has $2.6 billion in cash and about $250 million in debt due over the next four years.

"We have deliberately structured our balance sheet to withstand downturns," Mr. Flaws said. "We would like to be cash-flow-positive throughout the downturn, and we'll be spending less on research and development than we had hoped."

Corning has invested heavily in developing new business lines, but the economic downturn has diminished demand for its fiber-optic cable, used in telecom networks, as well as emissions-control devices for cars and trucks.

Dell Join Competition With Low-Cost "Netbook"

2008-09-04T07:42:00.002-03:00

The Wall Street Journal - 04/09/08

Dell Inc. will soon introduce a mininotebook computer, people familiar with the matter said, entering into a fast-growing market for inexpensive, no-frills portables that offer Internet capabilities at low prices.

One person familiar with the matter said the new device will likely sell for less than $400. That price range would put the Dell device into competition with products such as the Eee PC from Asustek Computer Inc., which helped define a breed of systems that are sometimes called netbooks.

Dell's product release was described in an email from Box.net, a company that says it will provide online services like photo and document storage that will "come preinstalled on the Dell Mini," which Box.net said would be announced Thursday.

Anne Camden, a Dell spokeswoman, confirmed that her company works with Box.net on Web access to online storage.

The people familiar with the new device said it will have a screen size of slightly less than nine inches and will be available with either Microsoft Corp.'s Windows operating system or a Linux operating system.

Market-research firm Gartner Inc. expects rising sales of low-end mininotebooks and estimated last month that companies would ship 5.2 million of the machines this year, eight million next year and as many as 50 million in 2012.

Dell rival Hewlett-Packard Co. released a similar machine earlier this year, and Asus has offered several updated Eee PCs in recent months. In May, Dell Chief Executive Michael Dell showed a mini-PC to the tech blog Gizmodo at a conference; Gizmodo later posted photos of the machine, which had a glossy, red case.

Dell had planned to release the mininotebook in June or July, a person familiar with the matter said. The company delayed it as it finalized the manufacturing process, another person said.

The popularity of the low-end portables presents risks for Dell, says Roger Kay, an analyst with Endpoint Technologies who follows PC makers. Dell last week reported a drop in quarterly profit from a year earlier and blamed falling PC prices. Inexpensive products like netbooks have slim profit margins that could exacerbate the situation.

Mr. Kay said there has also been concern that sales of netbooks could cannibalize PC makers' higher-end notebooks, which sell for $700 or more. But, Mr. Kay added, companies like Dell "really have no choice" but to enter the market because of projected demand for the machines.

Dell's Profit Drops 17% Amid Drive Into Asia

2008-09-01T05:16:00.002-03:00

The Wall Street Journal - 01/09/08

Dell Inc. reported a 17% drop in quarterly profit, raising questions about the company's 18-month turnaround effort and whether a slowdown in business spending is spreading to Europe and Asia.

The results sent shares down 14%, or $3.48, to $21.73 at 4 p.m. Friday on the Nasdaq Stock Market.

Dell's declining profitability was a negative counterpoint to rival Hewlett-Packard Co., which last week reported a 14% jump in quarterly profit.

While Dell's report is likely to renew worries about business spending, the Round Rock, Texas, computer giant acknowledged that some of its woes were the result of its effort to reignite growth, something Chief Executive Michael Dell called "an imprecise process" in a conference call with analysts. He said that the company was "a bit too aggressive" in some of its businesses. Profit margins fell during the quarter.

Dell showed signs of solid demand, reporting an 11% jump in revenue for its fiscal second quarter ended Aug. 1 from a year earlier. The company, best known for business PCs, said shipments of consumer machines rose 53%.

But much of that growth didn't translate into new profit, as the company has faced falling PC prices and heavier spending on marketing. Chief Financial Officer Brian Gladden added that Dell also is seeing a slowdown in tech spending that is beginning to metastasize.

"It really started with big corporations, and we've seen slowing in state and local government spending, small to medium sized businesses as well," Mr. Gladden said in a conference call with reporters.

The company expects "continued conservatism" in business tech spending in the U.S. as well as Europe and "several countries in Asia."

Dell has lagged H-P in exploiting sales to Asian countries, but has been moving to catch up in markets that include China and India.

While commercial sales in the Asia-Pacific region and Japan have been brisk -- rising 16% in the period -- Dell has had to sell lower-priced PCs in those markets and spend heavily on advertising.

Bill Kreher, an analyst at Edward Jones, said he didn't expect such poor results, and said he is concerned that Dell will continue having trouble in emerging markets. "The weakness in Asia came as a big surprise," he said. "We didn't hear that type of disclosure from other companies like H-P."

Dell, one of the most consistent performers during the early part of the decade, ran into a series of problems that led Mr. Dell early last year to return to the CEO post after a three-year hiatus.
While he was away, the company lost the No. 1 position in global PC sales to H-P, and had some highly publicized problems with customer service.

The company, once known for selling exclusively through the Web and via telephone orders, subsequently moved into retail stores, and has begun emphasizing style and color in its consumer notebook PCs. Such efforts resulted in increased market share and a 28% jump in revenue from consumer PC shipments in the second quarter from a year earlier, but "profitability was roughly break even" in the consumer division, the company said.

Notebook sales remained strong, advancing 26% in the quarter from a year earlier. But sales of desktop computers declined 2%.

Michael Dell acknowledged the computer giant has been 'a bit too aggressive' in its efforts to boost growth at some of its business units.

Unlike H-P, which makes money on software and technical services in addition to computers, Dell is almost entirely dependent on hardware. That means dropping PC prices have had a particularly big impact on its business in recent months, said Lou Miscioscia, an analyst at Cowen & Co. Dell's marketing spending also impacted its profitability. The company's gross profit margin declined to 17.2% in the recent quarter from 18.4% for the quarter ended in May and 19.9% in the year-earlier period.

Since Mr. Dell's return, the company has started revamping its manufacturing, increasing its reliance on contract PC makers and shutting down a factory in Texas. So far, though, such changes have been offset by rising expenses in marketing and investments in new product development.

Mr. Gladden said he holds meetings every other week to discuss Dell's expenses and said the company will continue a cost-cutting effort that began last year. He said Dell should hit its target of eliminating more than 8,800 jobs later this year. Investors will be paying close attention to ongoing cuts, said Mr. Kreher of Edward Jones. If PC and server prices continue falling, profit margins could be squeezed even more.

Investors will be paying close attention to ongoing cuts, said Mr. Kreher of Edward Jones, since PC and server prices are expected to continue falling, further squeezing profit margins.
The company said net income for the fiscal second period was $616 million, or 31 cents a share, compared with profit in the year-earlier period of $746 million, or 33 cents. Revenue rose to $16.43 billion from $14.78 billion.

AU To Invest NT$400 bil. To Build 4 LCD Factories

2008-08-28T04:56:00.001-03:00

The China Post - 28/08/08

TAIPEI, Taiwan -- AU Optronics Corp., the world's third-largest maker of liquid-crystal displays, plans to invest NT$400 billion to build four LCD plants in Taiwan in the next decade to meet demand for flat-screen televisions.

The panel maker plans to hire 10,000 workers for the factories, which will be located in the central city of Taichung, Taiwan Premier Liu Chao-Shiuan said in an e-mailed statement yesterday after a meeting with AU Optronics Chairman K.Y. Lee.

AU will begin construction of a so called 10th-generation factory in the second half of 2009, with production scheduled to start in 2011 or 2012, according to the statement. AU last month reported its second-quarter profit more than tripled after demand for screens used in computers and televisions drove up prices. The 10th-generation LCD factory, which can manufacture TV screens measuring at least 60 inches diagonally, will be the most advanced for AU, which currently operates 12 LCD factories in Taiwan.

Dell Unveils Low-Cost PCs Targeting Emerging Markets

2008-08-28T04:49:00.001-03:00

The China Post - 28/08/08

BEIJING -- Dell Inc. unveiled four low-cost computer models Wednesday designed for China, India and other emerging economies in a new bid to tap the potential of high-growth markets outside the United States.

The two notebook and two desktop PCs are the first Dell models designed especially for emerging markets, said Steve Felice, the U.S. computer maker's president for the Asia-Pacific. They are meant for small business users and are to be sold in 20 countries across Asia, Africa and Latin America.

Strong sales in Asia helped Dell turn in better-than-expected results in the first quarter despite a slowing U.S. economy. It is due to report its latest quarterly results Friday, and analysts are watching whether it can maintain its growth pace.

"Our success is going to be largely dependent on our ability to expand globally," Felice said in an interview.

Dell and rivals Hewlett-Packard Co., Taiwan-based Acer Inc. and China's Lenovo Group are expanding aggressively in emerging economies as sales growth in the United States and other developed markets slows.

Dell's first-quarter sales in China, India, Russia and Brazil -- markets known collectively as BRIC-- grew by 58 percent, about 10 times the U.S. rate, Felice said. He said Dell expects 20-30 percent annual growth in those markets in coming years.

Prices for the new Vestro notebooks will start at 3,299 yuan (US$475) and for the desktop PCs at 2,999 yuan (US$440), according to Felice.

Dell, based in Round Rock, Texas, broke with its usual development and marketing strategy for its latest products, he said.

Beijing-based Lenovo, which acquired the IBM Corp. PC unit in 2005, is targeting China's vast but poor rural market with a basic PC released last year and priced as low as 1,499 yuan (US$220).

Chi Mei To Delay Vietnam Project On slowing Demand

2008-08-13T08:41:00.001-03:00

The China Post - 13/08/08

TAIPEI, Taiwan -- Chi Mei Optoelectronics Corp., Taiwan's second-biggest maker of liquid crystal displays, said it will delay an investment in Vietnam indefinitely because of faster inflation and slowing demand for LCD monitors and televisions.

Chi Mei had planned to build a factory to assemble LCD modules in Hanoi in 2010, Denis Chen, director of finance and accounting at Tainan-based Chi Mei, said by phone yesterday. Vietnam's annual inflation quickened to 27 percent in July, the fastest pace since at least 1992.

Chi Mei joined companies including Sony Corp., the world's second largest television maker, in delaying or pulling out of investment in Vietnam. The Tokyo-based company said earlier this month it will shut a TV assembly plant in Ho Chi Minh City as lower trade barriers reduced the benefits of manufacturing electronic products in the country.

Asustek Second Quarter Net Down, Sees Strong Third Quarter

2008-08-07T23:42:00.002-03:00

TAIPEI, Taiwan -- Asustek Computer, the world's top PC motherboard maker, said yesterday its second-quarter net profit fell 18 percent, but forecast strong growth for its laptops heading into the back-to-school and holiday seasons.

Asustek expected third-quarter mainstream notebook shipments to rise 25-50 percent from the second quarter to 1.5-1.8 million units.

Shipment of its popular low-cost Eee PCs would grow to 1.5-1.8 million units from 1 million over the same period, according to a company statement. It added that overall third-quarter sales should rise about 30 percent sequentially.

But the company said it might not be able to meet its ambitious goal of selling 6.6 million notebook PCs, not counting Eee models, this year, predicting its final mainstream notebook sales total would fall somewhere between 6 million and 6.6 million units. Mainstream notebooks and Eee PCs are becoming an increasingly important part of Asustek's business, making up 63 percent of the company's NT$58 billion second-quarter revenue, it said.

The Eee PC line of low-cost PCs, first announced about a year ago, accounted for 18 percent of revenue in the second quarter, up from 10 percent in the first, the statement said, while its traditional motherboard and card business shrank to just 21 percent in the June quarter from the previous quarter's 28 percent.

Asustek posted a second-quarter net profit of NT$5.644 billion, lower than NT$6.846 billion a year ago and also down from NT$7.23 billion in the first quarter.

The result was slightly above a consensus forecast of NT$5.23 billion, according to eight analysts polled by Reuters Estimates.

Asustek has aggressively tried to market its own brand name globally in the past year and has recently seen a warm reception for its child-friendly Eee PCs, which are priced around US$400.
But analysts have warned that it could be hard for Asustek to sustain its profit margin for the low-cost laptop business, with competition heating up after firms like Acer and Hewlett-Packard rolled out similar models earlier this year.

Asustek competes with cross-town rival Acer in its own-brand laptop business and with Hon Hai Precision Industry Co. in its original equipment manufacturing units.

It counts top PC vendors, such as Apple Inc., Dell Hewlett-Packard and Lenovo, as major clients. Shares of Asustek ended up 4.6 percent before the company gave its outlook and its results, beating a 3.12 percent rise in the benchmark TAIEX index.

Numonyx, Hynix In 5-Year NAND Memory Chip Tie-Up

2008-08-07T23:23:00.002-03:00

The China Post - 07/08/08

TAIPEI/SEOUL -- Newly-formed memory chip maker Numonyx announced a big expansion Wednesday to its tie-up with South Korea's Hynix Semiconductor, as the former makes a new push into the NAND memory sector.

The fresh development agreement between Hynix, the world's No. 2 maker of memory chips and Numonyx, formed earlier this year with assets from Intel and STMicroelectronics, will last for five years, the companies said.

It involves development of a type of memory called NAND, which is used in everything from high-end cellphones to MP3 players and digital cameras.

About 90 percent of Numonyx's output is now another kind of memory called NOR, used in most older cellphones and still a mainstay in lower-end models that don't require major storage capacity for applications like music and video downloads.

But as the industry shifts more to NAND, a more expensive technology but with much higher capacity, Numonyx would like to steer its NAND-to-NOR output ratio to around 50-50, said Saul Zales, Numonyx general manager of corporate development.

"As part of the company's strategy, we realized NOR was maturing," he told Reuters in a phone interview.

"It was clear we needed to really shift more resources into NAND and invest not only in products but new technologies that will come to bear in two to three generations."

Shares of Hynix, the world's No. 3 NAND maker, were up 4.6 percent. Samsung and Toshiba, the world's No. 1 and 2 NAND makers, were up 2.5 percent and 4 percent, respectively, amid a broader rally in Asian markets.

The fast-growing NAND sector has shown signs of falling into the same cyclical patterns as the older dynamic random access memory (DRAM) sector, with NAND heading into a downturn after a rapid build-up in global capacity.

Hynix currently operates a DRAM plant in China jointly with Numonyx.

In April, iSuppli slashed its 2008 NAND growth forecast to 9 percent this year to US$15.2 billion from a previous 27 percent growth forecast, amid signs that buyers were sharply paring back their expectations for products using NAND-type chips.

The new Numonyx-Hynix tie up is not expected to have an immediate impact on the market, as it should take several years to ramp up to significant production.

Hynix is also being hit by a current downturn in DRAM, which represents 73 percent of its overall sales.

"It would be difficult to expect any significant impact from this announcement as neither company is in a position to invest much given the current memory market situation," said Won Seo, an analyst at NH Investment and Securities.

"Hynix is losing ground in NAND and doesn't look to have the funds or the ability to challenge market leaders Samsung and Toshiba. As for Numonyx, the NOR flash market is in standstill, so NAND could offer a solution, although the NOR and NAND markets are fundamentally different."

The tie-up is the second major one in recent months for Hynix, which last month posted a US$700 million net loss due to weakness in the DRAM and NAND markets.

In June, the company announced it would buy 9.5 percent of Taiwan's ProMOS for US$168 million, expanding its strategic partnership with the company in the DRAM space.

Elpida And Others To Build US$5 Bil. Chip Plant In China

2008-08-07T23:15:00.002-03:00

The China Post - 07/08/08

TOKYO -- Japan's Elpida Memory Inc., the world's No.3 maker of PC memory, and a Chinese investment group plan to spend about US$5 billion on a chip factory in southeastern China, in a move that could exacerbate memory chip price falls.

Elpida, which analysts expect will report a quarterly loss today, said it, the Suzhou city government and another unspecified company would set up a joint venture in which Elpida would be the main investor with a 39 percent stake.

The plant will supply chips for PCs used in China, will have an initial output capacity of 40,000 wafers a month when it goes on line in January-March 2010, and will raise capacity to 80,000 wafers at an unspecified time, it said.

"Elpida will probably lift its share (of the Chinese market) if the project proceeds as planned," JP Morgan Securities analyst Yoshiharu Izumi said Wednesday.

"But it's not clear that the company will be able to generate the targeted returns on investment, given ongoing falls in DRAM prices."

A supply glut in dynamic random access memory chips is dragging down earnings at No.1 memory maker Samsung Electronics Co. Ltd. and No.2 Hynix Semiconductor Inc., while prompting Taiwanese chipmakers Powerchip and Nanya Technology to post their fifth straight quarter of losses.

Many analysts say a strong recovery is unlikely in the second half of 2008 due to the global economic problems.

Elpida, which also makes DRAM in Taiwan with partner Powerchip, will help build the new factory in a science park in Suzhou, where Chinese chip maker HeJian Technology Co also has a plant.

Elpida works with Taiwan's UMC in a contract chip-making business for Japanese firms, and UMC helped set up HeJian.

Elpida spokespeople declined to comment on who the third party was and on whether it was in talks with HeJian or UMC about either of them investing in the factory venture.

"We are operating under the assumption that a third party will invest," Elpida spokeswoman Kumi Higuchi said, adding that how much such an investor would put in has not been decided.
Shares of Elpida closed up 2.9 percent at 3,150 yen prior to the announcement, while Tokyo's electrical machinery subindex rose 4.1 percent.

Hon Hai To Invest NT$100 billion For HQ

2008-08-07T23:09:00.002-03:00

The China Post - 07/08/08

TAIPEI, Taiwan -- Hon Hai Precision Industry Co., the world's largest contract electronics manufacturer, announced a NT$100 billion project to enhance its global headquarters in Taiwan yesterday -- one of the most ambitious the company has taken on in any part of the world.

The project was announced jointly by Terry Gou, chairman of Hon Hai, and Premier Liu Chao-shiuan after both met for over an hour at Hon Hai's headquarters in Tucheng, Taipei County.

In a briefing held after the meeting, Gou lauded the Liu Cabinet for making Taiwan more open to the international business community, and said his multinational conglomerate will increase its presence in Taiwan to take advantage of the government's openness policy.

There were three main areas in the investment package Gou announced yesterday: 1. expanding and strengthening Hon Hai's Taiwan headquarters; 2. expediting Hon Hai's overseas units to get listed on the island; and 3. building a Hon Hai Asia-Pacific operations center in Kaohsiung.

The most eye-catching of the three is definitely the first, where Gou promised to expand its global headquarters in Taiwan and have it invest in the following industries: optoelectronics, medical equipment, digital content, precision instruments and automation. The project is expected to create 30,000 jobs, of which 24,000 will be hired locally.

To have an ideal living environment for employees and their families, Hon Hai plans to spend NT$100 billion to build what Gou called a "digital environmental technological city" -- a living space big enough to accommodate 240,000 people, equipped with wireless Internet access, intelligent transportation systems and digitized medical provision, all encompassed in a land that stresses environmental sustainability.

As for where the digital city will be located, Gou kept a tight lip. "If I tell you now, that piece of land will see a rise in property value starting tomorrow," he said.

Gou, however, did say the location of the city will depend on measures local governments provide, citing as an example Alabama's offering of land at just US$1 for Mercedes-Benz, and New York State's offering of low-interest financing to AMD.

"The choice of location is heavily dependent on how local resources are distributed and how enthusiastic local governments are in accommodating us," Gou said, adding his company will submit a proposal to the Cabinet within six months.

As for having overseas units listed in Taiwan, Gou did not identify the companies likely to seek a flotation on the island. But Hon Hai Precision officials have said Foxconn International, which makes phones for Nokia Corp. and Motorola Inc., is planning to list in Taiwan.

Foxconn International went public in Hong Kong in February 2005. It would be the most high profile share offering in Taiwan since late 2003.

Finally, Hon Hai will move its largest transshipment facility to the southern Taiwan port of Kaohsiung, Gou said, adding that the facility will be Hon Hai's "Asia-Pacific operations center."
"The facility will act as a logistics hub between Hon Hai's operations in Taiwan and those in Vietman and Xiamen, mainland China," Gou said. "This will create a clustering effect, in which other companies will also set up operations centers in Kaohsiung. We believe this will significantly stimulate the economy of southern Taiwan."

Foxconn To Invest In Taiwan Outpost

2008-08-07T06:09:00.001-03:00

The Wall Street Journal - 07/08/08

TAIPEI -- The Foxconn Group, which includes Hong Kong-listed Foxconn International Holdings Co., plans to spend more than NT$100 billion (US$3.25 billion) to add jobs and create an Asia logistics hub in Taiwan, said Chairman Terry Gou.

The world's largest electronics-production conglomerate by revenue is aiming also to list its overseas units in Taiwan, Mr. Gou said. He was speaking after a closed-door meeting with Premier Liu Chao-shiuan at Tu Cheng, Taipei County, where the group's flagship Hon Hai Precision Industry Co. is based.

Hon Hai Precision -- the world's largest contract maker of electronics by revenue -- is the largest company in the Foxconn Group in terms of revenue contribution.

"With the opening between Taiwan and China, especially after the cross-strait direct flights, and considering the talent pool in Taiwan, we decided to give this island a chance," Mr. Gou said. He didn't identify the companies that the group plans to list in Taiwan.

Hon Hai Precision officials have earlier said Foxconn International -- which makes phones for Nokia Corp. and Motorola Inc. -- is planning to list shares in Taiwan. The group is still discussing whether to first delist Foxconn International from Hong Kong.

A Taiwan listing of Foxconn International, which went public in Hong Kong in February 2005, would be the most-high-profile share offering in Taiwan since a late-2003 listing by Formosa Petrochemical Corp., Taiwan's sole private oil refiner and Asia's largest ethylene maker by capacity.

The Foxconn Group, which employs 700,000 people globally, plans to add 20,000 research-and-development and 5,000 technician positions as well as 5,000 administrative workers for its global logistics operations in Taiwan, Gou said.

Hynix Extends Losses As Chip Sales Slow

2008-08-01T05:06:00.001-03:00

The Wall Street Journal - 01/08/08

SEOUL -- Hynix Semiconductor Inc. posted its third straight quarterly net loss on slowing sales of chips amid weak demand and charges linked to the closure of its U.S. plant.

But Hynix, the world's second-largest producer of computer memory chips by revenue after Samsung Electronics Co., forecast better results in the second half as it expects demand and supply to be better balanced in the global chip market.

"Personal-computer shipments will be solid in the second half, boosting chip demand," said O.C. Kwon, Hynix's senior vice president of strategic planning, on a conference call with analysts and investors. "Capital-expenditure cuts by chip makers and an accelerated shutdown of eight-inch wafer-fabrication lines will limit growth in chip supply."

Hynix posted a second-quarter net loss of 707.8 billion won ($698 million), reversing year-earlier net profit of 213.5 billion won. Sales fell 5% to 1.85 trillion won.

Hynix's bottom line also was hurt by 360 billion won in nonoperating losses from closing its chip-manufacturing facility in Eugene, Ore., Mr. Kwon said. Foreign-currency exchange losses related to its overseas debt also weighed on earnings, Hynix said.

Hynix had a second-quarter operating loss of 183.4 billion won, compared with an operating profit of 42 billion won a year earlier and a first-quarter operating loss of 505 billion won.

Analysts, while cautious about an early-market recovery, said Hynix may return to profit in the third quarter, helped by its move to advanced chip-processing technology and cost competitiveness against rivals in dynamic random access memory chips, or DRAM, used in personal computers.

"Given the cost-competitiveness gap between first- and second-tier makers, we expect Samsung and Hynix to be the only DRAM makers to generate a profit from the third quarter," said C.W. Chung, an analyst at Lehman Brothers. He added that DRAM prices likely will decline through year end, while a rebound in prices for NAND flash-memory chips is unlikely amid oversupply.

NAND flash-memory chips are widely used in music players and digital cameras. Hynix said due to the weakness in the NAND flash-memory chip market, it will shift some production capacity for these chips to DRAM.

Toshiba, Sony And Fujitsu Set For Laptop Price War

2008-08-01T04:38:00.001-03:00

Financial Times - 31/07/08

Sony, Toshiba and Fujitsu are all preparing to launch ultra low-cost laptops in an effort to get into the booming market led by Taiwan's Asustek, whose EeePC sells for as little as $300.

Quanta, the world's biggest notebook contract manufacturer, plans to make such a laptop for Sony, according to sources in Taiwan.

Inventec, a Taiwanese laptop manufacturer that also makes Hewlett-Packard's mini-note, is assembling a cheap laptop for Toshiba. And executives at Taiwanese component manufacturers say Fujitsu is preparing to make its own ultra low-cost laptop in-house.

The move is an attempt to counter the threat from makers of cheap laptops, which have been grabbing market share from the high-priced versions of the small format notebooks sold by the Japanese groups.

The unprecedented success of the EeePC, the low-cost notebook launched by Asustek late last year, has already prompted the three biggest laptop makers, HP, Dell and Acer, to announce their own plans for cheap notebook releases.

"For the Japanese, the rapid emergence of this new market segment is clearly a pain," said Alvin Kwock, an analyst at JPMorgan. "You see them making this move now because they fear the cheap laptops will cannibalise their UMPCs [ultra-mobile personal computers]."

Fujitsu confirmed it was developing a low-cost notebook for Hong Kong, mainland China and Singapore. But the Japanese group said it had not decided when it would begin selling it.
Fujitsu said it would hold off selling the low-cost PC in Japan until it was clear there was sufficient demand.

Sony, Toshiba and Quanta declined to comment. Inventec was not available for comment.

Worldwide PC Shipments Grow Faster Than Expected In Q2

2008-07-18T06:13:00.002-03:00

The China Post - 18/07/08

SEATTLE -- Computer shipments rose faster than expected in the second quarter, fueled by exceptional demand in emerging markets and a decline in prices in the U.S. and Western Europe, two research groups said Wednesday.

Worldwide shipments increased 16 percent from a year ago to 71.9 million PCs, according to Stamford, Conn.-based Gartner Inc. The company had predicted 11.2 percent growth.

IDC, a technology research group based in Framingham, Mass., that uses different methods to track sales, found a 15.3 percent rise, to 70.6 million computers.

Gartner analyst Mika Kitagawa attributed some of the surge to ongoing trends: rising shipments to emerging markets like China, Brazil, India and Russia; and the increasing number of computers per home thanks to the popularity of laptops. The power of the laptop segment was evident a day earlier, when chip maker Intel Corp. said second-quarter profit jumped 25 percent on ballooning global demand for the processors that serve as the brains of notebook computers.

However, Kitagawa hadn't foreseen the way economic jitters in mature markets would positively affect PC shipments in the quarter.

The analyst had forecast less than 2 percent growth in the U.S. in the shadow of its mortgage and credit market turmoil. But those troubles pushed down PC average selling prices, sparking a 4.2 percent increase in U.S. shipments.

Loren Loverde, director of IDC's quarterly PC report, attributed less of the growth to sales spared by falling prices, though he acknowledged aggressive price competition in mature markets.

Both research groups found that Palo Alto, Calif.-based Hewlett-Packard Co. held on to the top spot in the global market, which it wrested from Dell Inc. in 2006.

But as in the first quarter, Dell's decision to expand sales of computers to retail stores helped it gain ground.

Gartner found Round Rock, Texas-based Dell's shipments grew 22 percent while HP shipments rose a slower 17 percent.

HP's market share of shipments held steady from the year-ago quarter, at 18.1 percent, while Dell's share edged up to 15.6 percent from 14.8 percent, according to Gartner.

IDC reported similar dynamics between the two companies.

In the U.S., Dell topped HP, growing at a faster clip and grabbing 32 percent of the market to HP's 25 percent, according to IDC.

Taiwan-based Acer Inc., China's Lenovo Group Ltd. and Japan-based Toshiba Corp. rounded out both researchers' list of the top five worldwide, each clocking in with less than 10 percent share.

IDC's Loverde said Apple ranks No. 6 worldwide, but tied Acer in the U.S. for No. 3, with 7.8 percent share.

In June, Gartner and IDC increased their outlook for PC shipment growth in 2008, citing ongoing demand for laptops worldwide. But the second-quarter surprises won't automatically lead Gartner to boost its 2008 outlook again. Along with the trends that supported growth in the second quarter, Kitagawa will be weighing increasing demand for the nascent category of ultra-low-cost laptops against the effect of rising oil prices on manufacturing and shipping.

Loverde, of IDC, was less optimistic.

"We're waiting for PC shipments to slow down," he said.
IDC forecasts 13.4 percent growth in worldwide shipments in 2009 and 12 percent in 2010.

Fujitsu Plans Foray Into US$500 PC Market

2008-07-17T11:17:00.001-03:00

The China Post - 17/07/08

TOKYO -- Fujitsu Ltd. plans to launch low-cost hand-held PCs in Asia this fall, becoming the first Japanese maker to enter a market controlled by rivals such as Hewlett-Packard and Taiwan's Asustek Computer.

Fujitsu said Tuesday it would price its hand-held PCs at US$500 to US$700 for sale in China, Hong Kong and Singapore, going after demand for portable PCs to complement a more powerful PC at home. Fujitsu next plans to sell low-cost hand-held PCs in Japan by March 2010, but spokeswoman Miho Hirasawa said the company will proceed with caution at home.

Hynix May Pay US$51 mil. To Rambus For U.S. Market Access

2008-07-17T11:01:00.002-03:00

The China Post - 17/07/08

SAN FRANCISCO -- Hynix Semiconductor Inc., the world's second-largest maker of memory chips, might be forced to pay more than US$51 million a year, or 11 cents a share, to Rambus Inc. rather than be barred from its US$1.2 billion computer-chip market in the U.S. by a federal judge in California.

If Hynix gives in, larger competitor Samsung Electronics Co. and Micron Technology Inc. -- both in similar patent-infringement suits with Rambus -- probably won't be far behind, according to James Hopenfeld, a patent lawyer at Ropes and Gray in Washington. Rambus, based in Los Altos, California, is a designer and licensor of chips used in such products as Sony Corp.'s PlayStation video game.

"This is going to be a bellwether" decision, Hopenfeld said. "There's a strong likelihood the other cases will follow, but it's not guaranteed because there could be differences in the facts."

Prospects of a settlement were elevated after Rambus asked U.S. District Judge Ronald Whyte last month to block Ichon, South Korea-based Hynix from selling dynamic random access memory, or DRAM, chips in the U.S. The judge is likely to grant an injunction, the most severe punishment in such a suit, given that a jury ruled in a previous trial that Hynix illegally used Rambus's patent designs, said patent attorney Robert Sterne.

Rambus has "a better than 50 percent chance" of getting a court order, said Sterne, a partner in Sterne, Kessler, Goldstein & Fox in Washington. "I don't see any reason why a judge wouldn't grant an injunction."

BlackBerry suit
In a comparable case, Research in Motion Ltd. agreed in 2006 to pay NTP Inc., an Arlington, Virginia-based patent company, US$612.5 million because a judge was likely to shut down its BlackBerry e-mail service in the U.S., said Sterne, who isn't involved in the Rambus suits.
"Injunctions force resolution, every time," he said.

Hynix's U.S. DRAM sales last year were US$1.2 billion, according to the El Segundo, California-based research firm iSuppli Corp. In a settlement, Rambus might charge royalties of 4.25 percent to 7 percent of sales, according to court papers. That would mean annual payments by Hynix of US$51 million to US$84 million.

The lower rate is what Whyte used to set damages in a previous phase of the case and is based on Rambus's royalties from Hitachi Ltd. for an earlier version of DRAM. Seven percent is the top rate Rambus proposed to the court as appropriate for Hynix's use of its technology.

Besides banning Hynix sales, the judge can also order the company to buy a license from Rambus at a rate he sets or force the parties to arrive at one, said Ropes and Gray's Hopenfeld.

Sharp Focuses On Manufacturing

2008-07-10T08:14:00.002-03:00

The Wall Street Journal - 10/07/08

In an old seaport city near its Osaka headquarters, Sharp Corp. is building a $9 billion factory complex the size of 32 baseball stadiums to make liquid-crystal-display panels and solar panels. The complex, which Sharp broke ground last November, will be the world's largest LCD and next-generation solar panel plant when it is ready sometime in the next fiscal year, ending March 2010. It will house most of its major suppliers on the same premises. Sharp itself will invest about $4.3 billion.

While Apple Inc. is leading a trend in the electronics industry to outsource hardware manufacturing and focus on design and software, Sharp is making a huge bet that keeping manufacturing of LCD and solar panels in-house will give it a big competitive advantage.

The Sakai factory is the culmination of a decision 10 years ago by Katsuhiko Machida, Sharp's chief executive, to narrow the company's focus when it was barely making a profit. Sharp at the time was making cathode-ray tube televisions, but they weren't highly regarded because the company didn't make its own tubes. It was also making big investments in semiconductors, but was a minor player in the competitive industry.

So Mr. Machida, then president, ended production of CRT TVs, cut investments in semiconductors and focused on LCD technology, even though it was still an emerging, money-losing business. Mr. Machida, who saw potential in using LCD panels in televisions, declared that Sharp would replace every traditional television with an LCD TV in 10 years.

In the past decade, Sharp has become one of the world's largest LCD-panel manufacturers, and it nearly doubled its revenue to 3.4 trillion yen ($31.7 billion) and more than tripled its operating profit to 183.7 billion yen. Sharp's solar-panel business, meanwhile, is still small, but it is the world's second-largest manufacturer of the product after Germany's Q-Cells AG.

There are big risks. Prices for LCD panels have been steady so far, but several companies are planning new plants that will significantly increase global supplies, which could lead to price declines. What's more, some rivals like Sony Corp. also are developing next-generation technologies like the organic light-emitting diode, or OLED, which could eventually make LCD technology obsolete.

Still, if Sharp continues to be successful, the focused-manufacturing strategy could be a model for other Japanese electronics makers, which find Apple's outsourcing model a turnoff and are still trying to figure out a way to remain a manufacturer while growing its profit in an industry that is rapidly commoditizing.

In 2001, Mr. Machida created a stir by declaring his intention to build a $1.4 billion LCD panel plant in the town of Kameyama in central Japan, even though the trend at the time was to move factories offshore to places like China, where products could be made more cheaply.

The construction of the Kameyama plant was a turning point for Sharp, because it led to a technological breakthrough that allowed the company to make bigger and better panels before its rivals. For the first time, Sharp's TVs were in strong demand, particularly in Japan, as consumers sought to buy made-in-Kameyama TVs.

The new plant, built near its headquarters, takes that strategy a step further. Designed for both LCDs and solar panels, which share a similar manufacturing process, it will include factories for its major suppliers including Asahi Glass Co. and Corning Inc., which makes the glass for the panels. Even the gas and electric companies will have facilities on the premises.

Sharp plans to continue to make televisions and other electronics goods. But Mr. Machida says he believes LCD and solar panels will be more important to the company's survival and growth because they can differentiate themselves by packing more technology into them.

"There will eventually be no distinction between a parts manufacturer and an electronics maker," says Mr. Machida, adding that LCD panels have the potential to embed so much technology that a television in the future could consist of just a panel and a plastic frame.

When that happens, Mr. Machida figures that the parts makers will profit even if the finished goods become commoditized.

Whether Sharp can survive with the current strategy in the long term is still an open question. But Mr. Machida says he isn't worried because he just needs to recover his investments, something he is confident he can do.

By that time, Sharp hopes that its investments in its solar-panel business will pay off. Solar currently generates just less than 1% of global energy, but that is expected to increase to as much as 37% in 2040, according to the Cambridge, Mass.-based Prometheus Institute for Sustainable Development, which follows the industry. The research firm also estimates that the market could increase to more than $1 trillion in 2040, compared with $20 billion last year.

Sharp believes that even if competition increases, there should be plenty of business to go around. Sharp last month made another huge bet in this area by forming a partnership with an Italian power company to investigate the possibility of building a solar-generated electricity plant.

NB Assembly Company Revenue Report In June

2008-07-09T05:37:00.005-03:00

Economic Daily News - 09/07/08

Quanta, the leader of NB assembly company release its June revenue and ship quantity yesterday.

Quanta

Quanta ship 2.9 million pcs of NB in June (Increase 4% than May)
The amount of NB shipment in season two is 8.7 million/pcs (Increase 9% than first season)
Total revenue (plus Taiwan and China) in June is NT 62 billion which is 4% less than May
Total revenue from January to June is 402.67 billion which is 32.4% more than the same period last year
The reason barebone to complete product ratio is higher than before

Wistron

Revenue in June is NT 34.995 billion which is 22.4% more than May (New high record)
Inventec
Revenue in June is NT 22.54 billion which is 6.5% less than May

Compal

Haven't released its June revenue yet

AU To Cut Production After Missing Forecast

2008-07-09T04:04:00.002-03:00

The China Post - 09/07/08

HSINCHU, Taiwan -- AU Optronics Corp., the world's third-biggest maker of liquid-crystal displays, may shut some production lines after lower-than expected demand for LCDs forced the company to miss its second quarter sales target.

The company will probably cut output this quarter by suspending some production lines for the first time in more than a year, Executive Vice President Paul Peng said in a telephone interview yesterday from Hsinchu, Taiwan, where the company is based.

Sales in the April-June period dropped 9.6 percent to NT$123.46 billion from the previous three months, AU said in an e-mailed statement after the market closed yesterday. The LCD maker said in April second-quarter sales would fall by a "mid-single digit" percentage.

JPMorgan Chase & Co. described the company's June sales, which fell 17 percent from May, as a "shock to the market." AU led shares of LCD makers lower yesterday after Lehman Brothers Holdings Inc. cut its share-price estimates for flat-panel producers, citing an industry glut that may persist until the first half of 2009.

The weaker-than-expected sales in the second quarter were because of "the cautious inventory control for semi-annual results by customers as well as the anticipation of uncertain seasonal demand under current macro environment," AU said in the statement.

Prices of LCD computer monitors may fall 8 percent this month from June's average US$118, the biggest decline since May 2006, Taipei-based researcher Witsview Technology Corp. said Monday, citing slowing demand in China.

The suspension of production lines would probably last for one to two days, Peng said. "We may also defer some of the equipment spending from the fourth quarter to next year."
AU shares tumbled 5.8 percent to close at NT$44.9 on the Taiwan Stock Exchange, the lowest since March 7, 2007.

The company will probably have to match rivals in offering customers rebates before lower prices prompt demand to recover, analysts at JPMorgan, including Taiwan-based Liang-Chun Lin, wrote in a report yesterday.

Lehman and UBS AG have cut their share-price estimates on AU since the end of June on concern earnings have peaked and panel prices will decline amid a glut as the global economy slows down.

AU last shut production lines for about two days in the first quarter last year. The company will give guidance on its factory plans at an investor's conference on July 24, Peng said.

Peng didn't say by how much the company would cut capital spending this year. AU forecast in May that expenditure would double to NT$140 billion from the 2007 level.

Shares of LG Display Co., the world's second biggest LCD maker, lost 2.3 percent in South Korea, while Chi Mei Optoelectronics Corp., the fourth biggest, dropped by 6.9 percent, its daily limit, in Taipei trading.

AUO Decline 17% in June, Need Enhance its Iventory Control

2008-07-09T02:35:00.002-03:00

Economic Daily News - 09/07/08

In order to build the 7.5G LCD panel plant, AUO si planing to publish its corporate bond for 7 billions NT dollars.

AUO released its June revenue NT 36.724 billion, which is decline 17.2% than May this year.
The main reasons are affected by Macroeconic environment, and AUO's unsatisfactory inventory control.

AUO (June,2008)

Large-size panel ship: 6.72 millions/pcs (Decline 12.9% than May this year)
Medium and samll size panel ship: 13.51 million/pcs (Decline 2.7% than May this year)
Second season revenue: NT 123.464 Billion (Decline 9.6% than first season revenue)

CMO (June, 2008)

Revenue in June NT 29 billion (Decline 14.7% than May this year)
Second season revenue: NT 96.5Billion (Increase 4.8% than first season revenue)

Hannstar (June, 2008)

Revenue in June NT 6.467 billion (Decline 8.7% than May this year)
The first 6 month revenue NT 39.676 billion (Increase 6.7% than 2007 the same period)
Medium-size panel ship 641K in June (Increase 12.5% than May this year)
Large size LCD panel and HannsG (Own brand product) ship 1.467 million in June (Decline 7.2% than May this year)

PC Monitor Market Likely To Increase

2008-07-07T02:44:00.001-03:00

The China Post - 07/07/08

TAIPEI, Taiwan -- Taiwan's personal computer (PC)monitor market will grow despite a sluggish global economy that is driving down demand for information technology products, a market watcher predicted yesterday.

In the first quarter of the year, PC monitor output in Taiwan dropped to 324,829 units, a decline of 14.8 percent from last year's fourth quarter and a 2.2 percent drop year-on-year, according to a recent report by market researcher International Data Corporation (IDC).

The decline however began in the last quarter of 2007, when the market output of 455,517 units fell by 7 percent quarterly and 8 percent annually, the report indicated.

According to a market watcher, this decline is due mainly to the increasing popularity of notebooks, which do not require separate monitors.

"It is estimated that by this year's fourth quarter, over 50 percent of global computer buyers would be looking for notebooks," said Simon Yang, vice president of the local think tank Topology Research Institute.

Also, Yang told the CNA Sunday, compared with the last two quarters, a smaller number of buyers are replacing their cathode ray tube (CRT) monitors with liquid crystal display (LCD) screens.

This is because most users who wanted to switch to LCD monitors already did so in 2007 when LCD monitors were hot on the market, he explained.

Nonetheless, he expressed a positive outlook for 2008, saying that large PC monitors could take up part of the monitor market.

"PC monitors with 22- or 24-inch panels could also be used to watch TV," Yang said, indicating that buyers could save space with the use of these screens.

In addition, Window Vista, the latest version of Microsoft's operating system, requires a 22-inch monitor or bigger to achieve the best resolution, he said, pointing to another advantage of large LCDs.

In light of these positive factors, Yang predicted that this year's PC monitor market output could still show single-digit growth compared with 2007, with sales likely to peak in the third and fourth quarters of the year.

"With students and teachers returning to school in September, the monitor market will rise to meet the new demand," the expert forecast.

The IDC also projected that the monitor market will rebound starting in the third quarter of this year, as both home and business users will be looking to buy new LCD monitors for their PCs in the latter half of the year.

Powerchip Semiconductor May Raise NT$ 3 Billion

2008-06-25T07:00:00.001-03:00

The China Post - 25/06/08

TAIPEI, Taiwan -- Powerchip Semiconductor Corp., Taiwan's biggest computer-memory chipmaker, said it may sell as much as NT$3 billion of bonds to fund operations. The three-year bonds would be sold through a private placement, the Hsinchu, Taiwan-based chipmaker said in a statement to the stock exchange yesterday, without specifying a timeframe for the sale.

Powerchip posted its fourth consecutive quarterly loss in April because of falling prices caused by a glut of dynamic random-access memory chips, or DRAM, the most common chip used in computers.

Two Billion PCs Expected To Be In Use Worldwide By 2014

2008-06-25T06:57:00.001-03:00

The China Post - 25/06/08

SAN FRANCISCO -- The number of PC's in use worldwide will double to two billion within six years, research firm Gartner said in a study released Monday.

The study found that the number of PC's in use grows by some 12 percent a year, while about 180 million PCs, or approximately 16 percent of the worldwide installed base, will be replaced this year.

Most of the growth is coming from emerging markets, the study found.

"Mature markets such as the U.S. , Western Europe and Japan currently account for 58 percent of the world's installed PCs, but these markets only account for 15 percent of the world's population," said Gartner analyst George Shiffler in a statement.

"We expect per capita PC penetration in emerging markets to double by 2013. Rapid penetration in emerging markets is being driven by the explosive expansion of broadband and wireless connectivity in these markets and the continuing fall in PC average selling prices."

Addressing DRAM Drain

2008-06-25T02:14:00.001-03:00

The Wall Street Journal - 25/06/08

Rising power consumption in computer rooms is a big issue in Silicon Valley. Now, two companies are taking aim at a major contributor to the problem -- the memory chips used in server systems.

Spansion LLC, working with a start-up called Virident Systems Inc., is mounting an ambitious campaign to replace the ubiquitous chips known as DRAM -- for dynamic random-access memory -- for servers used for jobs such as managing large Web sites. These chips are very fast at recording and fetching data but tend to be heavy users of power because they require a constant flow of electricity to retain data.

The two companies are proposing that server makers instead use a new variant of a chip called NOR flash memory, which is often used to store software in cellphones. NOR chips retain data when power is turned off, but they are usually too slow at recording data to be considered to replace DRAM.

Spansion, a NOR-chip supplier in Sunnyvale, Calif., that was spun off from Advanced Micro Devices Inc., says it has developed a design called EcoRAM that is much faster than NOR while consuming about one-eighth the power of DRAM. The company also has invested in Virident, a closely held company in Milpitas, Calif., that is developing companion technology that will allow the new chips to be used in the same kind of modules as DRAM.

The two companies say the new technology allows them to offer more data-storage capacity per module, making it possible to replace four DRAM-based servers with one system using EcoRAM chips. Customers could either reduce energy consumption in a data center by about 75% while keeping total memory capacity constant, the companies said, or seek four times the memory capacity of existing servers at the same total power consumption.

"We can offer green and growth at the same time," said Raj Parekh, Virident's chief executive.
Mr. Parekh says server makers can adopt EcoRAM-based memory modules with few modifications. Still, convincing them to change such a fundamental building block may not be easy, and Spansion isn't disclosing customers yet.

Jonathan Koomey, a consulting professor at Stanford University who has studied data-center power consumption, said the idea of using flash memory in servers to reduce power consumption is promising and "has been tantalizingly on the horizon for the past year or so." Some companies are using another variety of flash memory, known as NAND, in place of disk drives.

Not all computing jobs are suited for EcoRAM, which is considerably slower than DRAM for recording data. Spansion and Virident are focusing on Web-search services that might update stored information only once a day or so.

Competing technologies also are emerging. Edward Doller, chief technology officer at rival Numonyx, a joint venture formed by Intel Corp. and STMicroelectronics NV, argues that EcoRAM may at best be a "transitional" step until the advent of a technology called phase-change memory his company is pushing.

Bertrand Cambou, Spansion's chief executive, said EcoRAM should be less expensive to produce in high volume than DRAM, but he hopes to match DRAM pricing. "We want to have a high-value business, not a commodity business," he said.

Acer 2009 Low-Cost Laptop Sales May Reach 20 Million

2008-06-04T08:07:00.002-03:00

The China Post - 04/06/08

TAIPEI, Taiwan -- Acer Inc., the world's third-largest computer maker, said it expects to sell seven million low-cost laptop computers this year, and 15 million to 20 million notebooks in 2009.

President Gianfranco Lanci made the comment yesterday in Taipei in an interview before the debut of the company's Aspire one low-cost computer, which will use Intel Corp.'s Atom processor.

Taipei-based Acer joins Asustek Computer Inc. in the market for the lower-price notebooks. Asustek Chief Executive Jerry Shen said Monday he expects to double shipments of the company's Eee PC to 10 million units next year.

Acer Chairman J.T. Wang predicted low-cost notebooks could account for as much as 20 percent of the total laptop computer market, without giving a timeframe.

"Optimistically, this could hit the sweet spot and reboost growth" in the computer industry, he said at the Aspire one ceremony.

Demand for the Atom is higher than Intel anticipated, Bill Calder, a spokesman for the Santa Clara, California-based company, said on April 30. Asustek's Shen said Monday he expects shortages of Atom chips to last until October, citing Intel executives.

"There is some limitation, but I don't think it's going to have a big impact" on Acer's sales, Lanci said.

Asustek Sees Double EeePCs In 2009

2008-06-04T08:02:00.001-03:00

The China Post - 03/06/08

TAIPEI, Taiwan -- Taiwan's Asustek Computer Inc., the maker of low-cost Eee PCs, said yesterday it expects sales of the handbag-sized laptops to double to around 10 million units next year on strong demand from Europe, Asia-Pacific and India.

The company, which had previously estimated that it would sell 5 million Eee PCs this year, forecasts low-cost PC sales are set to hit 20-30 million units globally in 2009, Asustek's Chief Executive Jerry Shen told reporters.

Asustek is showing its latest Eee PCs at COMPUTEX Taipei, the world's second-largest PC fair which runs between June 3-7.

Asustek said it hopes sales of Eee PCs will help lift its market share in North America -- currently only 1 percent -- as the subprime crisis and rocketing fuel costs take their toll on consumer spending.

The Eee PC, far the most popular model of smaller, low-cost PCs known as netbooks, is seeing the strongest demand from Europe and Asia-Pacific, and expects growth to pick up in emerging markets like India, Asustek said.

"Asustek is among our top picks in hardware stocks due to improving execution post restructuring, strong brand positioning and substantial notebook share gains, Eee PC sales and greater exposure to emerging markets," said Ellen Tseng, analyst at Nomura Securities.

Asustek shares closed up 1.5 percent yesterday, outpacing the main TAIEX's 1.2 percent gain.
Some analysts are concerned that Eee PCs will soon face fierce competition from PC leaders, such as Dell, Hewlett-Packard, and Acer, which are going after the low-cost market.

"It could get harder for them in terms of competition, and as margins are slim for Eee PCs, it could be a challenging race ahead," said Daiwa Institute of Research analyst Calvin Huang.
Asustek competes with larger rival Acer in its own-brand business and electronics maker Hon Hai Precision Industry Co. in contract manufacturing.

Asustek has said it hoped to become the world's fifth-largest laptop PC seller by 2010. It also makes laptops for Apple and Dell, and had spun-off its manufacturing business into a separate company earlier this year.

Intel Targets Low-Cost Computers

2008-06-04T03:24:00.002-03:00

The Wall Street Journal - 04/06/08

Intel Corp. plans to formally introduce on Tuesday a much-anticipated chip for use with low-priced computers, though recent product delays likely will loom over the chip maker's announcements at a big trade show in Taiwan.

Acer's Aspire One, at a price of $379, is one of the laptops using Intel's Atom chip.

The technology giant plans to use the Computex show to tout a line of chips dubbed Atom, which will serve as calculating engines for so-called Nettops and Netbooks, Intel's term for extremely low-priced desktop and portable computers. The Santa Clara, Calif., company estimates the notebook variety will sell in the $200 to $350 range, while the desktop machines will cost about $200 to $300.

Some companies expected to unveil Atom-based Netbooks at the show include Taiwan's Acer Inc. and Asustek Computer Inc., which introduced a popular product called EeePC last year that helped define the category.

Intel's executive vice president and general manager of its sales and marketing group, Sean Maloney, said in an interview that he expects customers to show off at least 30 machines as part of his keynote speech Tuesday. He reiterated past company statements that supplies of the chip may be tight, because of unexpectedly strong orders. "We were surprised at how strong the demand was," he said.

Hewlett-Packard Co. and Dell Inc., the U.S. companies that hold the top two positions in global PC sales, also have plans for Netbooks, though they haven't disclosed specific plans to use the Atom chip; H-P recently introduced a model called the Mini-Note that uses a chip from Via Technologies Inc.

Intel is expected to disclose Tuesday that Atom chips for Netbooks will carry a list price of $44 and operate at 1.6 gigahertz, while Atom chips for Nettops will list for $29 each.

In other developments at Computex, Intel plans to announce what it calls the Series 4 chipset, designed to help PCs handle high-definition video, according to Erik Reid, a director in Intel's mobile-platform group. Chipsets are a class of products that work to connect microprocessors to the rest of a system.

Intel also plans to provide an update of deployments for WiMax, a wireless technology for long-distance data communications, and discuss momentum in new pocket-size products the company calls MIDs, for mobile Internet devices.

But a much bigger battle at the moment is being waged over conventional laptops, an Intel stronghold where rival Advanced Micro Devices Inc. is trying to play a bigger role. Intel had expected to deliver a long-awaited chipset for that market, dubbed Montevina, in June. But technical glitches and delays in receiving government approval for a wireless communications component recently forced the company to push back the introduction of the chipset to July 14.

That initial version of the chipset comes only with Wi-Fi short-range communication. A version that comes with chips to communicate using WiMax is expected in the second half of 2008.
Though Intel had once predicted that 2008 would be the "year of WiMax," network operators aren't expected to widely offer a mobile version of the service until next year.

The delays aren't expected to hurt Intel's finances, but are clearly a disappointment. "Oh Montevina, you crafty minx. You broke our hearts with the launch delay," Craig Raymond, a senior Intel technical marketing engineer, wrote in a company blog.

But Mr. Raymond extols the capabilities of a prototype Asustek laptop with the chip technology he is trying out, communicating via a WiMax network in Taiwan. "It won't be long before we kiss and make up," he wrote.

Intel CEO: Smaller Gadgets To Expand Market

2008-05-30T05:48:00.001-03:00

The China Post - 30/05/08

NEW YORK -- Intel Corp.'s push to create and boost new categories of small, cheap Internet-connected devices is taking the world's largest chip maker in some unusual directions.

It's investing in wireless networks, or even buying them outright. It's relying on software that isn't from Microsoft. And it's looking at making processors cheaper and smaller rather than faster and faster.

To Chief Executive Paul Otellini, it's all part of bringing the Internet to new places and people, and computer makers are responding.

"I've not seen energy like this from our customers in a long, long time," Otellini told The Associated Press on Wednesday. "Everyone views this as being sort of hyperexpansive to the existing market."

A centerpiece of the strategy is the Atom processor, which packs the power of a PC-class processor from six years ago into the smallest space yet -- 25 Atoms will fit on a square inch. It's intended for Mobile Internet Devices -- iPhone-like tablets that provide a "full" Internet experience, better than that available on cell phones.

Somewhat larger than the MID is what Intel calls the "netbook," a small, cheap laptop. Taiwan's AsusTek has had a breakout hit in this category with its eeePC, which starts at US$300 (euro191) and uses an Intel chip. Other manufacturers, like Hewlett-Packard Co., are entering the space too, though HP is using a chip from Via Technologies Inc.

Otellini isn't concerned that low-power processors could "cannibalize," or steal, sales from Intel's high-end, high-margin products.

"If a higher-priced notebook isn't substantially better and doesn't offer more utility, shame on us," he said. "If there's cannibalization, I'd rather be the cannibal than someone else."

Bill Hughes, an analyst at the research firm In-Stat, noted that a relatively small group is behind the demand for netbooks, which some stores have had trouble keeping in stock.

"It's growing fast because it's very small," Hughes said. "It will continue to be a niche for the foreseeable future."

As for MIDs, Hughes said the firm's surveys indicate that consumers are much more likely to want a "smart" phone rather than carry another gadget along with a cell phone.

"Mobile Internet Devices are going to struggle in the U.S., but that doesn't mean they aren't going to be wildly popular in other markets," he said.

To connect these portable gadgets to the Internet, Intel is backing WiMax, a wireless technology sometimes described as a long-range version of Wi-Fi. Like Wi-Fi, it has its roots in the PC industry, but it's really a competitor to cellular wireless technologies.

Most major wireless carriers are skipping WiMax, planning instead to build out networks using Long Term Evolution, a successor to current cellular technology.

To keep WiMax in the running, Intel is contributing US$1 billion (euro640 million) to a US$14.5 billion (euro9.26 billion) venture controlled by Sprint Nextel Corp. that will build a WiMax network across the U.S., with a commercial launch sometime this year in a few markets.

Intel is also a minority investor in a consortium that bought a Japanese WiMax license. And in May, it paid US$26 million (euro16.6 million) to buy a wireless broadband license in Sweden. It did that without a partner, but Otellini suggested that the company is looking for one.

Asus Lowers 2008 Laptop Output Target

2008-05-30T05:34:00.001-03:00

The China Post - 30/05/08

TAIPEI, Taiwan -- Taiwanese computer manufacturer ASUS, in view of global competition, has lowered its 2008 notebook computer output target by 5.7 percent, a newspaper said on Thursday. ASUS has lowered its annual output target from 7 million units to 6.6 million, the Apple Daily quoted ASUS Chairman Jonney Shih as saying.

Chip Sales To Rise Less Then Forecast

2008-05-30T05:17:00.001-03:00

The China Post - 28/05/08

TOKYO -- Global semiconductor sales this year will probably increase less than previously forecast, on slumping demand for memory chips used in personal computers and consumer electronics, the industry's largest association said.

Chip sales will probably rise 4.7 percent to US$267.7 billion in 2008, less than the 9.1 percent forecast in November, and will gain 5.8 percent in 2009, WSTS Inc. said Tuesday in a statement. Revenue increased 3.2 percent last year, according to the San Jose, California-based group.

WSTS, whose members account for about 90 percent of the industry, joins market researcher ISuppli Corp. and UBS AG in lowering the outlook amid concern the global economy is slowing.
The worst housing slump in more than a generation in the U.S. is undermining home values, consumer spending and overall growth.

Revenue in the industry will rise 4 percent to US$273 billion this year, less than the 7 percent forecast earlier, UBS said last month, citing "weak" prices for memory chips and slowing consumer spending. El Segundo, California-based ISuppli last month cut its projection to 4 percent in 2008 from 7.5 percent.

A glut drove down computer-memory chip prices last year, forcing Hynix Semiconductor Inc., the world's second-largest maker of the product, and Taiwan's Powerchip Semiconductor Corp. last month to post losses and reduce investment plans for this year. Elpida Memory Inc., Japan's biggest maker of computer-memory chips, reported a second consecutive quarterly loss.

Price declines, especially for dynamic random access memory, or DRAM, chips, is the primary reason for the revenue forecast cut, Masahiro Ikuma, WSTS's regional chairman for Japan, told reporters in Tokyo.

"Looking at the weak demand in the last two quarters, we have to say the decrease in demand for DRAM may last longer than expected," Ikuma said, without elaborating.

Falling property values, rising home foreclosures and fuel prices are prompting U.S. consumers to save their dollars as they cope with mortgage payments and higher living expenses.
Economists surveyed by Bloomberg News this month forecast consumer spending in the world's largest economy would increase this quarter at the slowest pace in 17 years.

WSTS said the global chip market will continue to expand through its three-year forecast period, peaking in 2010, driven by demand for products including personal computers, mobile phones and automotive electronics.

TPV Poised For Assault On TV Market

2008-05-30T00:14:00.002-03:00

Financial Times - 26/05/08

TPV Technology, a Hong Kong-based company which is the world's biggest maker of computer monitors, is planning a big foray into TV set production as part of a goal to double its sales over the next five years.

In an interview with the Financial Times, Jason Hsuan, the Taiwanese chairman and chief executive of TPV - which has most of its production in China - said his aim for the company was to be making 30m flat-screen TVs a year by 2013, up from 4m last year.

A key part of this strategy would involve TPV acting as an "outsourcing" business for companies which sell the TVs using their brands but have no interest in manufacturing the products.

The company is hoping to benefit in particular from a long-standing link with Philips, the Dutch electronics company, which is also its biggest shareholder with a 12 per cent stake.

Under an alliance with the European group, TPV already makes computer monitors and TVs which are sold to Philips and distributed to consumers under the company's brand name.

Mr Hsuan said: "We think we can benefit from our experience in [computer] monitor production . . . to scale up in the field of TV manufacturing.

"Our economies of scale [through manufacture of computer monitors] gives us great leverage in bringing down costs from sourcing parts mainly from around Asia."

Under the company's plans, it would increase its sales from an expected $10bn this year to about $20bn in 2013. While this year only about a fifth of revenues will come from TVs, in five years' time the proportion could rise to more than half.

TPV has eight plants in China, Poland and Brazil. Most of its production comes from China, where it employs 23,000 of its 30,000 worldwide staff.

Most of its computer monitors are sold to large computer makers including Dell and HP of the US and China's Lenovo, which sell them on to consumers using their brand names.

This year, the company is expected to make about 50m computer monitors.

By 2013, Mr Hsuan is keen for TPV to increase monitor production to about 70m a year, at a somewhat slower rate than the pace at which it would push up TV production. Apart from working with Philips on TVs, it also aims to build on its existing relationship with US companies such as Vizio and BestBuy which already buy some of its monitors and TVs for their own branding.

TPV may also try to interest other leading suppliers of branded TVs, such as Sony, Sharp and Toshiba.

Mr Hsuan said key advantages for the company were its low production costs and a strong record in research and development. "We have 1,000 research engineers, 500 of them working on TV sets," he said.

The company is listed in Hong Kong and Singapore and has a research and development centre in Taiwan.

Inventec To Build Fourth Notebook Plant

2008-05-26T04:15:00.001-03:00

The China Post - 26/05/08

TAIPEI, Taiwan -- Taiwan's Inventec plans to build a fourth notebook computer manufacturing plant to meet an expected increase in global demand, a newspaper said yesterday.

Inventec, which is the main contract notebook computer maker for Toshiba and Hewlett-Packard, had a slack season in the first quarter, the Commercial Times reported.

However, Inventec expects its output to rise by 10 to 15 percent in the second quarter as Toshiba's laptop battery production returns to normal and Acer, which became the world's No. 3 notebook brand in 2007, is expected to place more orders with Inventec, the daily said.

Currently Inventec's facilities can manufacture 20 million notebook computers each year, the paper said. But if there is a 20 percent increase in world demand for notebook computers, Inventec will build its fourth notebook computer plant in late 2008 or early 2009, to expand its annual output to 30 million notebook computers.

Inventec was founded in 1975 to make electric calculators. But over the years it has developed into a manufacturer of high-tech electronic products like notebook computers, servers and wireless products.

Inventec produced about 10 million notebook computers and 20 million servers in 2007. It is the world's top original design manufacturing (ODM) server maker and one of the top five notebook computer makers.

AU Sees Tight LCD Supply, Strong Demand

2008-05-22T23:48:00.001-03:00

The China Post - 23/05/08

TOKYO -- Taiwan's AU Optronics, the world's No.3 LCD maker, said yesterday that robust demand for computers and LCD TVs is likely to cause a tight supply of panels soon, and new PC models will further drive growth into next year.

Despite concerns over a slowing U.S. economy, reseaarch firm DisplaySearch has said demand for laptop PCs that use liquid crystal displays (LCDs) will be strong from emerging markets, including China, Brazil, Russia and India, in the next two years.

"We've been watching subprime, inflation and oil prices ... but the recent U.S. economy looks better, we are cautiously optimistic," AU Chief Executive Officer H.B. Chen told the Reuters Global Technology, Media and Telecoms Summit. "For the second half, we know the third quarter is a hot season, so supply will be a bit tight," said Chen, whose company supplies LCDs to top PC sellers such as Dell Inc. and Hewlett-Packard Co. and some TV brands.

Chen's forecast came one month after AU posted its second best quarterly profit for the first quarter, while AU has said it expects shipments and prices of PC and TV panels to be mixed in the second quarter, with PCs faring better.

All the company's laptop LCDs will be illuminated by LED backlights, which save more power than the conventional cold cathode fluorescent lamps (CCFLs), by 2011, as part of its efforts to make environmentally friendly products.

AU expects strong demand for flat panels for smaller monitors that can show high-definition TV programs -- known as moniTVs -- whose screen sizes range from 15 inches to 32 inches.

"The trend is moving to bigger screens, but we will not focus only on larger size," said Chen, who expects global demand for moniTVs to double to 50 million units next year from this year.
Major LCD players have learnt a lesson from the last downturn, when over-optimistic producers flooded the market with too many panels, and are focusing on moderating spending plans and cutting costs.

AU will allocate at least NT$100 billion for its capital expenditure in each of the next two years, compared with this year's forecast of NT$140 billion, but the budget can be adjusted depending on market conditions.

"We have a buffer to do that and the bottom line is if we are still profitable then we have more room to invest," Chen said.

In Taipei, AU shares closed up 0.5 percent yesterday, defying a 0.1 percent fall on the main TAIEX index.

Competing with two bigger South Korean rivals, LG Display and Samsung Electronics, AU has announced a longer-term plan to build a new factory using more advanced 10th generation or higher technology for making LCDs.

Chen said there will be a small-scale production by 2011 or 2012 but it has not yet decided on the glass size.

But this year, there's a concern about the impact from the deadly earthquake in China as the market had bet that the Beijing Olympic Games in August is set to fuel demand for LCD TVs.
"Sentiment wise, we have some concerns over the uncertainty," Chen said. "In 2009, maybe to early to say now, but we are not too pessimistic."

Nanya Tech May Sell Inotera Stake To Micron

2008-05-22T23:43:00.001-03:00

The China Post - 22/05/08

TAIPEI, Taiwan -- Nanya Technology Corp., Taiwan's second-biggest maker of computer-memory chips, is considering selling a stake in Inotera Memories Inc., its venture with Qimonda AG, to Micron Technology Inc.

"It's one of the options if we buy Qimonda's stake in Inotera," Nanya Senior Vice President Moor Chen said by phone yesterday. He declined to say if Nanya and Micron, which announced in April they will invest US$1.1 billion to form a venture to share costs, are in talks on such a sale or to comment on other options.

Nanya and Qimonda, the memory-chip unit of Infineon Technologies AG, each own about 35 percent of Taoyuan-based Inotera, according to data compiled by Bloomberg. The two shareholders said in March they are in talks over the future of the venture, after falling prices caused Munich-based Qimonda to scale back investments.

Shares of Boise, Idaho-based Micron fell the most in two months Tuesday after Lazard Capital Markets LLC said the company may spend about US$1 billion to expand output capacity and is "highly likely" to buy Qimonda's stake in Inotera. Doug Freedman, an analyst with American Technology Research in San Francisco, said Micron's lack of cash resources means the company may have to raise funds.

Daniel Francisco, a spokesman at Micron, the biggest U.S. computer chipmaker, said Tuesday the company doesn't comment on "rumor or conjecture." Francisco couldn't be reached on his mobile phone after office hours yesterday.

Taoyuan-based Nanya and Qimonda aim to finalize details on their stakes in Inotera in June, Charles Kau, president of the venture, said by telephone yesterday.

Lenovo's Profit Soars Despite Tech Weakness

2008-05-22T23:02:00.001-03:00

The Wall Street Journal - 23/05/08

HONG KONG -- Despite a downturn in U.S. technology spending, net profit at computer company Lenovo Group Ltd. more than doubled in its fiscal fourth quarter, helped by a strong performance in its home market in China and sales growth in Europe and the Middle East.

But the company's leaders warned that the weak U.S. economy poses challenges for the global personal-computer industry, and vowed to rein in costs by taking additional steps to streamline Lenovo's supply chain in the coming year.

"There are definitely clouds in the sky," said Chief Executive Bill Amelio. "We face an uncertain global economy."

Lenovo, the world's fourth-largest PC company in terms of shipments, said net jumped to US$140 million in the quarter ended March 31, from $60.3 million a year earlier. Revenue from continuing operations rose 14% to $3.73 billion from $3.29 billion.

For the fiscal year that ended in March, net profit tripled from the year earlier, boosted by a $65 million gain from the sale of the company's handset business, which Lenovo sold this year to focus on its core computer business. While world-wide PC shipments grew 15% in the first quarter of 2008, Lenovo's overall growth rate was 21%, according to research firm IDC.

The results suggest that Lenovo, the Chinese company that acquired the PC division of International Business Machines Corp. in 2005, may be relatively well-positioned to weather the U.S. economic slowdown that is battering the technology sector. Of the top-five PC companies, Lenovo has the least exposure to the U.S. market. Nearly 40% of the company's sales are in China, and the China business is expected to benefit from Lenovo's sponsorship of the Olympic Games, to be held in Beijing in August. Lenovo holds roughly 25% of the Chinese market, and shipments to China rose 24% in its fiscal fourth quarter.

"As long as China maintains high growth, Lenovo is relatively safe," said Charles Guo, an analyst with J.P. Morgan in Hong Kong.

Lenovo also showed strong growth in Europe, the Middle East and Africa, where sales rose 30%.
But the weak American economy could hinder the company's efforts to expand its footprint in the U.S., the world's largest technology market, which accounts for 26% of global PC sales.

Earlier this year, Lenovo entered the U.S. consumer market with a line of notebooks called IdeaPad. Previously, Lenovo's U.S. business was built around sales of its ThinkPad notebooks to corporate customers.

As corporate technology spending has slowed, Lenovo has been targeting consumers, a segment of the PC industry that is experiencing more rapid growth. Lenovo's shipments in the Americas region, which includes Canada, the U.S. and parts of Latin America, were up 9% last quarter.

"For Lenovo, the U.S. is definitely very slow," said Jenny Lai, an analyst with CLSA. Ms. Lai said Lenovo's IdeaPad line is priced high when compared with computers offered by rivals like Acer Inc. of Taiwan. She said Lenovo needs to broaden its offerings and lower its prices in the U.S.,
where the brand is still relatively new to consumers.

Some of Lenovo's rivals are adjusting their strategies for the U.S. economy. This month, Hewlett-Packard Co. announced a deal to acquire tech-services giant Electronic Data Systems Corp. for about $13.3 billion as the company tries to expand beyond the PC business and offer more professional services to compete directly with IBM. Dell Inc., meanwhile, recently announced that it would surpass a goal it announced last year of cutting 8,800 employees, as the company carries out a plan to slash $3 billion in annual expenses in three years.

At Thursday's earnings briefing, Lenovo addressed speculation that it is pursuing acquisitions to expand its global market share. The company reiterated that it is open to acquisitions, but Mr. Amelio said "at this juncture, there isn't anything for us to announce or talk about, because we don't have any candidates in mind."

Last year, Lenovo was in the running to purchase Netherlands-based PC maker Packard Bell BV, but Acer eventually prevailed. An acquisition could help Lenovo reclaim its spot as the world's third-largest PC company, a position it lost after Acer purchased Gateway Inc. last summer.

Laptop For Poor To Get Windows

2008-05-19T03:17:00.003-03:00

The Wall Street Journal - 19/05/08

The goal three years ago was to provide by now millions of the world's poorest schoolchildren with a $100 laptop that ran free, open-source software. But amid disappointing sales and cost issues, the nonprofit project called One Laptop Per Child is turning to Microsoft Corp. and its proprietary Windows operating system to try to stage a turnaround.

Bohdan Raciborski, group program manager for Microsoft, says it took his team a year to develop Windows for One Laptop Per Child Project's XO machine, but that it can now run any Microsoft application. He demonstrates the software.

In an agreement announced Thursday, OLPC will begin testing its laptop running Windows XP and other proprietary Microsoft software in several developing countries next month. The test machines will be Windows-only, with Microsoft selling the operating system to OLPC as part of a software package for just $3. OLPC's founder, Nicholas Negroponte, says that the group's distinctive green-and-white laptop will be offered by October as a "dual-boot" machine that can run both Windows and its current, open-source operating system, Linux.

Mr. Negroponte says OLPC's nonproprietary software hindered sales, with some countries reluctant to commit to a nonstandard machine that didn't run Windows.

The marriage between OLPC and Microsoft has already drawn heated accusations from open-source supporters that Mr. Negroponte has abandoned the nonprofit's core mission of fostering collaborative learning. They say that unlike Windows, the OLPC software was designed to encourage students to work together and tinker with the operating system and child-friendly interface. In the last two months, OLPC has lost two key employees, including its president of software, Walter Bender, over the nonprofit's growing ties with the software giant. "You don't need me to put Windows on a laptop," Mr. Bender said in an interview.

"Yes, it has riled up some of the people who feel that we have to remain fundamentalist," says Mr. Negroponte, a professor on leave from the Massachusetts Institute of Technology. But, he says, "our mission is not open source. Our mission is children and learning."

By using only open-source software, OLPC might have hurt Microsoft's long-term ability to dominate personal computing in emerging economies. If millions of young students learned to use a computer that ran only free software, they might have been less likely to buy Microsoft software later on when they entered the work force.

The agreement with OLPC underscores Microsoft's eagerness to market its software in emerging markets, where it has tried to seed Windows in schools -- the target of OLPC's machines. The $3 price represents a big discount to what the company charges in the U.S. Recently, Microsoft has also done $3 software deals in Russia, Libya and Egypt.

Until now, the OLPC laptop came packaged with Linux, as well as an open-source learning platform called Sugar and educational software that could be freely modified. It was developed by the nonprofit and several thousand volunteers.

To date, OLPC has sold about 600,000 units, mostly to Peru, Uruguay and North American consumers who participated late last year in a donation program. Mr. Negroponte, who unveiled the $100-laptop plan with great fanfare in 2005, had originally predicted the project would sell 100 million to 150 million machines in 2008.

Microsoft officials are making no predictions. "We have not made any kind of internal forecast on the number of machines that this deal will sell," says James Utzschneider, head of marketing for the Microsoft unit that targets developing countries.

Until last year, relations between OLPC and Microsoft had been frosty. Microsoft chairman Bill Gates publicly belittled a prototype of the OLPC machine -- which originally featured a hand crank for power -- at a conference in 2006, saying, "Geez, get a decent computer where you can actually read the text and you're not sitting there cranking the thing while you're trying to type."
But the relationship grew closer last year as OLPC moved toward actual production. Roger L. Kay, a technology-market analyst at Endpoint Technologies Associates in Wayland, Mass., says of the new agreement, "This is a good defensive play by Microsoft to make sure this market, if it develops, doesn't get away from it."

OLPC will continue to face growing competition from other low-cost laptops, including one marketed by Intel Corp. The chip maker, which had joined the OLPC board in July, dropped out in January, citing disagreements with Mr. Negroponte over Intel's continued marketing of its Classmate machine. The OLPC machine uses a microprocessor from Intel's chief competitor, Advanced Micro Devices Inc.

Adding Windows will raise the cost of the OLPC machine, currently about $188, to about $198 because of the software and required additional hardware. OLPC plans to announce next week a new version of its laptop that will run both Windows and Linux, but won't be available until 2010, Mr. Negroponte says.

The nonprofit faces hostility from backers of open-source software. Ivan Krstic, who left OLPC in March as a software architect, on Wednesday released on his Web site a scathing critique of his recent work there. It accuses Mr. Negroponte of wanting to ship "plain" Windows machines and abandoning the nonprofit's long-stated goal of fostering learning.

"In fact, I quit when Nicholas told me -- and not just me -- that learning was never part of the mission. The mission was, in his mind, always getting as many laptops as possible out there," he wrote. In an interview, Mr. Krstic said Mr. Negroponte told him this over lunch recently in his native Croatia.

Mr. Negroponte denies this, calling it "an amazing and false quote" and adding, "OLPC's mission has not changed since inception."

Meanwhile, Mr. Bender is in the process of starting a nonprofit foundation called Sugar Labs whose purpose is to get the Sugar user interface on the current OLPC laptop to run using more open-source operating systems. Its motto: "It's an education project, not a laptop project."
Mr. Negroponte serves on a committee to protect the editorial integrity of Dow Jones & Co., the publisher of The Wall Street Journal, which was acquired last December by News Corp.

LG Display Production-Line Plan Adds To Oversupply Concerns

2008-05-19T03:09:00.002-03:00

The Wall Street Journal - 19/05/08

SEOUL -- LG Display Co. plans a one trillion won ($960 million) liquid-crystal-display production line, adding to analyst and investor concerns that an anticipated oversupply will be worse than expected.

The production line likely will begin operations in the second quarter of 2009, Chief Executive Kwon Young-Soo said at an analysts' meeting Thursday. LG Display is the world's second-largest LCD maker by sales after Samsung Electronics Co.

The investment will be spread between this year and next. The company will likely spend about 600 billion won on the new LCD line this year, boosting 2008 total capital expenditure to 3.6 trillion won, Mr. Kwon said.

LG Display's capital spending will decline to about 1.8 trillion won in 2009 as demand for LCD panels slows, he added.

Asia's LCD makers, including LG Display, have benefited from capital-spending cuts in the past two years and strong demand from emerging markets amid limited supplies. Next year, however, the LCD industry likely will face an oversupply, with flat-screen makers expanding capacity again to meet fast-growing demand, analysts said.

"This investment will likely worsen overall industry oversupply in 2009," said James Kim, an analyst at Lehman Brothers. "The LCD industry will experience oversupply from October this year."

LG Display said the new sixth-generation line, using glass substrates measuring 1,500 millimeters (60 inches) by 1,850 millimeters, will have monthly output capacity of 60,000 units and mainly produce panels for monitors and notebook screens.

Mr. Kwon said the company is reducing television-panel output by switching some of its LCD lines to produce information-technology panels, because some of its TV-panel clients are experiencing weakening demand. LG Display's major TV-panel customers include LG Electronics Inc., Philips Electronics NV, Vizio Inc. and Toshiba Corp.

The executive expressed confidence that by strengthening its technology-panel business the company would withstand potential oversupply in 2009, citing that as a reason for adding the sixth-generation line.

Some analysts disagree.

"LG Display is not the only one that is shifting LCD lines from TV panels to IT panels. Its rivals in Taiwan are also doing the same, raising concerns that the entire industry is heading toward oversupply," Mr. Kim said.

Intel Corp. Assesses China Chip Plant After Earthquake

2008-05-15T10:16:00.001-03:00

The China Post - 15/05/08

TAIPEI, Taiwan -- Intel Corp. says it hopes to soon reopen a chip plant it closed after a massive earthquake hit China's Sichuan province, as the world's top two contract laptop PC makers awaited word on any impact to their operations.

Intel, whose central processing chips serve as the "brains" for about 80 percent of the world's personal computers, shut a chip packaging factory in the Chinese city of Chengdu after Monday's quake, which was centered about 100 km (60 miles) away.

The company was conducting a seismic analysis of the earthquake's impact, and employees were expected to return Friday, a spokeswoman said in a statement.

"While the current situation is dynamic, we hope to resume operations as soon as possible pending the completion of a seismic assessment of our facilities and restoration of infrastructure in the region," the statement said. Quanta Computer and Compal Electronics, the world's top two contract notebook makers, said they were awaiting an official response from Intel on whether supplies would be affected.

The pair collectively make about 60 percent of the world's laptop computers, and count big names like Dell, Apple and Hewlett-Packard among their customers.

Local media reported that Intel had contacted Advanced Semiconductor Engineering (ASE), Amkor and Siliconware for assistance following the earthquake.

Quanta shares were unchanged in Wednesday trading in Taiwan, while Compal shares were down 1.1 percent, both trailing a 0.22 percent rise for the broader market. ASE and Siliconware shares were down 0.45 percent and 0.56 percent, respectively.

Analysts said disruptions to the big laptop PC makers stemming from the plant's closure should be minimal.

"It's a small plant, (so it should have) no impact," said Merrill Lynch analyst Dan Heyler, adding that the plant did not process any notebook-related chips.

The earthquake's epicenter, north of the provincial capital, Chengdu in Sichuan province, has little manufacturing, and while the region accounts for more than 9 percent of China's rice output, the quake largely devastated a steep and rainy area that is known for growing oranges, peppercorn and vegetables.

Analysts said they did not expect serious economic effects from the disaster but supply shortages could fuel inflation, already at a near 12-year high.

Dell Tries To Revive Its Gaming-PC Business

2008-05-15T09:46:00.002-03:00

The Wall Street Journal - 15/05/08

Dell Inc. is taking a surprising step to reinvigorate its business in specialty gaming personal computers: abandoning several of its most popular models to focus on what it sees as its premium line.

The new strategy is part of Dell's broader turnaround effort. Last year, it slipped behind bigger rival Hewlett-Packard Co. in overall PC sales and is struggling to achieve profits in consumer PCs. Gaming PCs -- high-priced machines made specifically for playing games -- are a niche market, but tend to shape PC design trends and influence mainstream buyers.

Full-fledged gaming-PCs, with their powerful processors, souped-up storage and glitzy three-dimensional graphics, start at about $2,000 and can run much higher, compared with about $700 for the average desktop PC, according to market researcher IDC.

Next month, Dell will begin phasing out four gaming systems in its XPS line of PCs, leaving the Alienware line that it acquired in 2006 as its sole offering to big-spending gamers, a largely male group predominantly 18 to 34 years old. A combined gaming design and development unit of the Round Rock, Texas, PC seller will oversee the seven current Alienware models.

It is an overdue but risky move. Alienware's colorful boxes and slick technology catapulted it to the top of the now about $12 billion gaming-PC market. However, under Dell, which continued to market its XPS gaming machines alongside the acquired machines, Alienware fell to earth. "Alienware lost some mojo," says Ted Pollak, a gaming analyst at market watcher Jon Peddie Research in Tiburon, Calif.

Dave Kemick, a 20-year-old University of Pittsburgh student, says he quickly ruled out Alienware as he started looking for a gaming machine earlier this year. "Others have taken their place," he says of Alienware. Arthur Lewis, the recently named head of Dell's gaming-PC division who joined the company with Alienware, says the brand remains a "premier" name in the market. The consolidation allows Dell to put its marketing might under a single name, he says.

Among other changes, Dell plans to end XPS marketing campaigns such as the ongoing tie-in with the popular computer game World of Warcraft. Dell doesn't disclose sales of the line. The gaming business is important to the PC maker's turnaround. Dell identifies gamers as a group whose purchasing decisions influence other PC buyers.

Gaming-PCs, which do double-duty as email, word-processing, or Internet machines, also have lost some ground to less-expensive game consoles. Sales of the $300 to $500 consoles from Nintendo Co., Microsoft Corp., and Sony Corp. last year for the first time pulled alongside sales of gaming-PCs. This year, console revenue is expected to surpass that of the PC-based game machines, says Mr. Pollak.

Dell in 2006 bought Miami-based Alienware, and H-P followed suit by buying VoodooPC, a smaller company also known for innovative designs. The two hoped to use their clout to consolidate a market dominated by small companies and do-it-yourself marketers.

H-P subsumed the Voodoo brand and puts its own brand first. It now advertises the Blackbird game-PC as having "Voodoo DNA." Dell, in contrast, left Alienware to develop and market its own products. It sought to boost Alienware's profit by pooling component purchases to achieve economies of scale.

Mr. Lewis says getting the savings "took some time" after the acquisition. People familiar with the situation say it took Dell longer than expected to combine the two -- and Dell's XPS line ate into Alienware sales.

Late last year, Dell moved the founders of Alienware out of their executive positions and into product-development roles. Mr. Lewis, an attorney who had been an Alienware vice president, took charge of the company's entire gaming-PC division. Mr. Lewis says he quickly realized that the competition between the XPS and Alienware brands was unproductive.

The resulting group is now working on a line of new products that go beyond the colorful Alienware boxes -- which Mr. Lewis calls "passe" -- by using new materials for their exteriors. He insists there is plenty of runway left for the brand, noting that Dell's consumer research shows Alienware remains an admired brand among gamers.

While optimistic, Mr. Lewis concedes that it's a constant challenge within the larger Dell organization to maintain the kind of edgy, maverick style that resonates with gamers. "Even before Dell, it was a challenge keeping that irreverent culture," he says.

Hitachi Sees First Profit In Three Years On Disk Drives

2008-05-14T08:37:00.002-03:00

The China Post - 14/05/08

TOKYO -- Hitachi Ltd., Japan's second-largest plasma-television maker, forecast its first annual net income in three years, helped by profit at its disk-drive unit.

Net income will probably reach 40 billion yen (US$385 million) in the 12 months ending March 31, 2009, compared with a 58.1 billion yen loss a year earlier, Tokyo-based Hitachi said Tuesday. The loss for the last fiscal year was less than the 70 billion yen Hitachi predicted on March 14.

Hitachi expects the disk-drive division to turn profitable after cutting jobs, closing factories and reducing material costs. The loss at the company's television business, which makes plasma and liquid-crystal display TVs, will narrow, Hitachi said.

Hitachi's flat-panel TV business will continue to lose money this year, although the company is aiming to post a profit at the division for the second half, Senior Vice President Toyoaki Nakamura said at a briefing in Tokyo, without providing details.

Compal To Build Plants In Poland And Brazil

2008-05-09T05:16:00.001-03:00

The China Post - 09/05/08

TAIPEI, Taiwan -- Taiwan's Compal Electronics Inc., the world's second-largest contract notebook computer maker, plans to build a notebook computer plant in Poland and another in Brazil, a newspaper said yesterday.

Compal President Ray Chen said that Compal, while keeping its production base in China and building its secondary production base in Vietnam for low-end notebook computers, plans to diversify investment due to the difficulty in expanding notebook computer output in China,caused by transport and component supply problems, the Economic Daily News said.

So Compal has applied to open notebook computer plants in Poland and in Brazil, and close its plant in Manchester, United Kingdom, due to rising workers' salaries.

Two Laptops Travel Light; Flaws Weigh Them Down

2008-05-09T01:31:00.003-03:00

The Wall Street Journal - 09/05/08

For years, the ThinkPad line has been the class of Windows laptops -- offering rugged, simply designed machines with great keyboards, even in small sizes. But ThinkPads have always been aimed at corporate buyers, not the broader consumer market. So Lenovo, the Chinese company that took over the brand from IBM, is bringing out a new, consumer-focused line called IdeaPads.

Walt Mossberg says recently released tiny notebooks from Lenovo and Asus have a long way to go before succeeding with a broader group of consumers.

I've been testing one of these new IdeaPads, a small, thin model called the U110, that's sized to be ideal for travelers. It looks nothing like a classic black ThinkPad. It even comes in red, has swirls etched into its case, and can supposedly log you in by recognizing your face using its built-in camera.

At the same time, I've been trying out another similarly sized little laptop, the U2E from Asus, a Taiwan-based company whose products are relatively new to the U.S. This computer has its own distinctive design: It's clad in real leather. It also has a camera, and it can be ordered with one of the new solid-state drives, which have no moving parts, instead of a hard disk.

Both of these small laptops are subnotebooks, meaning they weigh 3 pounds or less. Like many subnotebooks, they have small 11-inch screens and somewhat cramped keyboards. And, like most subnotebooks, they are costly -- an $1,899 starting price for the Lenovo and $1,999 for the Asus.

Each can only be ordered with Microsoft's Windows Vista operating system, which means you can practically walk your dog in the time it takes them to start up. Each has a standard battery so wimpy that it provides poor battery life, so both companies throw in bigger batteries that provide decent power, but make the computers larger and heavier.

I wish I could recommend a clear winner between these two contenders, but both are mixed bags. The IdeaPad is lighter, thinner, and has a slightly faster processor. The Asus has a built-in DVD drive, while the Lenovo's is external. The Asus also has the new, faster "N" type of Wi-Fi networking, while the IdeaPad is stuck with the older, slower "G" type.

The IdeaPad has two big flaws, in my view. First, it has blown the biggest advantage of its sibling, the ThinkPad: a great keyboard. The IdeaPad keyboard has huge, flat keys with slick, shiny surfaces and almost no space between them. I found typing difficult with this setup. I asked two people who are faster typists than I am to try it: One liked it, one hated it. The IdeaPad also dispenses with the TrackPoint, the little pointing stick for moving the cursor that many ThinkPad lovers revere.

By contrast, the Asus U2E keyboard, while nothing to write home about, is more conventional and more usable, with traditional tapered keycaps that provide better key separation. The mouse buttons underneath the touch pad on the Asus, while thin, were sturdier than the ones on the IdeaPad, which had a cheap feel to me.

The second big flaw in the IdeaPad is its most hype-worthy feature: face recognition, which is meant to spare you the need to type in a password to log in. In a dozen tests, it recognized me only twice. I asked my wife to try it, and it never once recognized her. It did recognize a colleague successfully, but we tried it only once with her.

The Asus's biggest flaw is its solid-state drive. It adds $700 to the price, for a total of $2,699, but is only 32 gigabytes in size, tiny by today's standards. To compensate, Asus throws in an external hard disk, but that's an inconvenient solution.

You can order the Asus with a standard 120-gigabyte internal hard disk for the $1,999 price, but that's still $100 more than Lenovo charges for the IdeaPad with the same sized drive.
Each machine has three USB ports, a video-out connector, a slot for camera memory cards, and an ExpressCard slot, typically used for cellphone modems. Neither has a built-in cellphone data modem. The Asus has three gigabytes of memory, the Lenovo just two.

In my tough battery tests, where I turn off all power-saving features, turn on the Wi-Fi, and keep music playing constantly, the Asus got about 1.5 hours and the Lenovo a miserable one hour and three minutes. This means that, even with a more normal usage pattern, you'd be lucky to get two hours out of the IdeaPad and 2.5 hours from the Asus.

With the included bigger batteries, the IdeaPad clocked out at three hours and 10 minutes, which means you could probably stretch it to over four hours with more normal use. The Asus's bigger battery delivered an excellent five hours and 29 minutes in my test, which points to nearly seven hours in more normal use. Asus says it has tweaked its machines to improve battery life somewhat.

However, while the jumbo battery on the IdeaPad barely protrudes from the machine, and keeps the weight under three pounds, the one on the Asus U2E is so huge it looks like a tumor and pushes the weight to 3.4 pounds, well above the subnotebook cutoff.
If you're a frequent traveler, both of these models are worth considering, but each has its own flaws.

Hynix Buys Into ProMOS

2008-05-09T00:56:00.001-03:00

The Wall Street Journal - 09/05/08

SEOUL, South Korea -- Hynix Semiconductor Inc. plans to buy between 8% and 10% of Taiwan's ProMOS Technologies Inc. in a strategic partnership that would allow the chip makers to pool resources to better weather the current chip-industry downturn.

Under the agreement unveiled by both companies Thursday, the South Korean maker of dynamic random access memory chips will also transfer its advanced 50-nanometer-class chip-process technology to ProMOS.

"The new partnership will largely help our financial stability and create stronger ties," with Hynix, ProMOS Chairman Chen Min-Liang said at an investors' conference in Taipei.

Based on ProMOS's total outstanding common shares and the company's Thursday closing price, Hynix will have to pay about US$180 million to acquire a 10% stake in ProMOS.

"Hynix plans to cooperate with some financial investors to buy the stake through private placement to strengthen our long-term relationship," the South Korean chip maker said.

Taiwan regulations restrict foreign ownership of more than 10% in a local chip company. Hynix may buy common shares, preferred shares, convertible bonds or a combination of the three, sold by ProMOS, Mr. Chen said.

ProMOS said this month it plans to sell as much as US$350 million of convertible bonds and as many as one billion new preferred shares through a private placement, in addition to 1.5 billion new common shares.

After the purchase, Hynix will become the second-largest shareholder of ProMOS after Taiwan's Mosel Vitelic Inc., which has about a 13% stake.

Hynix will have the right to one ProMOS board seat, Mr. Chen said. ProMOS may start using the nanometer technology to make 12-inch chips by late 2008 or early 2009, he added.

The agreement would be an extension of a current partnership between the two companies, under which ProMOS uses Hynix's 70-nanometer and 80-nanometer chip technologies.

Mr. Chen said ProMOS also had been engaged in talks with Japan's Elpida Memory Inc. over a potential partnership but decided to stick to Hynix as it would cost less for ProMOS to adopt Hynix's technology. An Elpida official declined to comment.

News of the deal sent shares in both companies higher. ProMOS's shares rose 2.1% to NT$8.44 (28 U.S. cents) each at the close of Thursday's session. Hynix closed up 2.8% at 29,100 won ($28.18) in Seoul.

"This is a win-win for both companies. They need each other to remain competitive," said Jay Kim, an analyst at Hyundai Securities. "Without ProMOS, Hynix would have faced a reduced market share and a decline in revenue."

Laptop Makers Face Huge Surge In Costs

2008-05-09T00:24:00.001-03:00

Fiancial Times - 08/05/08

Retail prices for laptop computers are set to rise as contract manufacturers move to raise prices for the first time in the face of soaring raw material and assembly costs.

Quanta, Compal and Wistron, the world's three largest notebook contract manufacturers by output, are in talks with their customers - branded computer vendors such as Hewlett-Packard, Dell and Acer - on how to share the burden of rocketing prices for key materials. Labour costs in China, where the manufacturers have their main production bases, are also rising.

"We will be raising prices for the first time," said Ray Chen, chief executive of Compal, which expects to account for 25 per cent of the global market this year.

"In the past, we [the contract manufacturers] were always forced to absorb upward price pressures. But 95 per cent of the industry is controlled by Taiwanese manufacturers, and the prices for key materials such as copper and plastic resin and the cost of labour in China have been rising so much that it doesn't make sense for us to continue lowering prices."

Analysts said higher costs would probably be passed on to consumers very soon.

Quanta, Compal, Wistron and their smaller peers design and assemble most notebook computers, which the leading PC companies sell under their own brands.

Over the past decade, the Taiwanese contract manufacturers have seen their profits squeezed following consolidation among the branded vendors.

The Taiwanese manufacturers have called for price rises following past surges in cost, but never managed to get their customers to agree.

Now, however, several of the branded PC companies have agreed to share part of the burden, recognising that the entire supply chain is clamouring for price rises, according to executives at the notebook manufacturers.

"This time, the industry can make a case because makers of components such as batteries, panels or memory chips, which in some cases the branded vendors source directly themselves, are sending the same message," said Chris Wei, an analyst at the Institute for Information Industry, an industry think tank in Taipei.

The main pressures are from soaring prices of cobalt and nickel, used in rechargeable batteries, as well as new labour laws and tax rules in China which have driven manufacturing costs up.

Compal Shares Gain As Price Targets Raised

2008-05-08T03:46:00.002-03:00

The China Post - 08/05/08

TAIPEI, Taiwan -- Compal Electronics Inc., the world's second-biggest maker of laptop computers for other companies, climbed to the highest this year in Taipei after Morgan Stanley and Goldman Sachs Group Inc. raised share-price estimates.

Compal jumped 6.4 percent to NT$35.70 as of 12:51 p.m. on the Taiwan Stock Exchange, the highest since Dec. 11. The island's benchmark Taiex index added 0.9 percent.

The company is in talks with its clients, who include Hewlett-Packard Co. and Dell Inc., to raise assembly prices in the second quarter because of higher costs for labor and raw materials, Compal President Ray Chen said in a briefing after the market closed yesterday.

"We expect Compal will likely transfer part of the cost increase" to its clients, Grace Chen and Jasmine Lu, analysts at Morgan Stanley, wrote in a research report today. They raised Compal's 12-month share-price estimate by 14 percent to NT$32. Goldman Sachs kept a "buy" rating on the stock and increased its price target to NT$41 from NT$39.

Fishkill Bar Mates Tied To Chip Cartel, Prompts Probe

2008-05-05T07:16:00.001-03:00

The China Post - 02/05/08

SAN FRANCISCO -- Ken Heller knew his company might have crossed the line. The sales executive for Hynix Semiconductor Inc. and his co-workers had been collaborating for years with rival companies around the world to fix the prices of memory chips, fingernail-sized semiconductors used in tens of millions of personal computers.

In March 2001, Heller tried to hide what was going on.

"Just fyi, pls consider NEVER making statement in e-mail that you spoke with competition," he wrote in an e-mail to one of his salesmen. "Lawyers love these babies."

They do -- and they did. Starting in 2002, U.S. Justice Department antitrust prosecutors unearthed Heller's e-mail, along with scores of others showing a vast price-fixing cartel among leading chip producers in Japan, South Korea, Germany and the U.S.

Since then, 15 officials at four companies have been sentenced to as much as 14 months in prison for violating the Sherman Antitrust Act by colluding on prices for dynamic random-access memory, or DRAM, chips. That's the most convictions won in any single international cartel case since the U.S. first made conspiring to rig prices a crime in 1890.

Heller, who agreed to cooperate with investigators, wasn't prosecuted. Four chipmakers pleaded guilty and agreed to pay US$732.7 million in criminal penalties for violating the Sherman Act. The companies included the two biggest, both based in South Korea: Samsung Electronics Co., located in Suwon, and Hynix, in Ichon.

A judge also fined Tokyo-based Elpida Memory Inc., Japan's largest maker of computer memory chips, and Neubiberg, Germany-based Infineon Technologies AG, Europe's second- biggest semiconductor maker. The case is far from closed. It's morphed into something even bigger.

Prosecutors are now investigating possible price rigging of other components in everyday products in communications and entertainment: personal computers, mobile phones, music players, cameras and monitors for PCs and televisions.

Investigators on three continents have joined U.S. prosecutors in the probes, which involve some of the same companies busted in the chip cartel, according to firms that received Justice Department subpoenas or inquiries.

"The DRAM case is the first significant cartel case of the Internet age," says Robert Lande, a lawyer who specialized in anti-competitive practices at the Federal Trade Commission from 1978 to 1984 and is now a law professor at the University of Baltimore.

All told, investigators are probing possible collusion in the pricing of electronic parts with an annual value of about US$159.6 billion, says John Connor, professor of industrial economics at Purdue University and a researcher of cartels.

While price fixing may be contagious, it's not necessarily effective.

The US$31.3 billion DRAM chip industry has been fighting a losing battle against falling prices for two decades. In the 1980s, 10 companies dominated the DRAM market, leading to price wars and oversupply in an industry with billions of dollars in research and development costs and razor-slim profit margins.

Santa Clara, California-based Intel Corp., the world's largest semiconductor maker and the first to produce DRAM chips in 1969, stopped making them altogether in 1986, as losses grew.

Today, five companies control 80 percent of the market. And the collusion effort was inevitably futile, says Jim McGregor, principal analyst at Scottsdale, Arizona based consumer electronics research firm In-Stat. It was like trying to get in the way of a train, he says. Chips are almost identical, so they're priced as if they are commodities.

ProMOS Posts Loss, Will Raise Cash

2008-05-05T06:41:00.001-03:00

The Wall Street Journal - 05/05/08

TAIPEI -- ProMOS Technologies Inc. said Friday it swung to a record quarterly net loss in the first quarter and unveiled a fund-raising plan aimed at raising cash to fund capital expenditures.
Taiwan's third-largest memory-chip maker by revenue after Powerchip Semiconductor Corp. and Nanya Technology Corp. said it plans to sell up to US$350 million worth of convertible bonds overseas through a private placement.

The company also plans to issue as many as 1.5 billion new common shares. Based on ProMOS' Wednesday closing price of NT$8.15, the share portion is valued at NT$12.23 billion (US$401.6 million.)

The fund-raising plan is expected to be finalized at a shareholders' meeting June 13.

ProMOS said it swung to a net loss of NT$8.05 billion, or NT$1.20 a share, for the three months ended March 31, reversing a net profit of NT$4.33 billion, or NT$0.62 a share, a year earlier. Revenue fell 56% to NT$7.64 billion from NT$17.5 billion a year earlier.

The slump in dynamic random access memory chip prices amid a supply glut has forced many global DRAM producers to post hefty losses, with some chip makers now burning cash to sustain operations.

"Among Taiwanese DRAM makers, ProMOS has the most urgency for funds," said Capital Securities analyst Chen Li-yen.

As of March 31, ProMOS' cash and cash equivalents totaled NT$5.66 billion, down sharply from NT$21.96 billion a year earlier.

ProMOS spokesman Ben Tseng said weak market conditions may mean that ProMOS may cut this year's capital expenditure to US$600 million from US$800 million originally planned. ProMOS is planning to set aside US$200 million to pay Hynix Semiconductor Inc. to transfer technology, he said.

However, ProMOS is facing difficulties in obtaining more advanced technologies from the South Korean DRAM maker because of the Korean government's restrictions on exports of advanced technologies, Mr. Tseng said.

Quanta, Compal Shares Rise To 4-Month Highs On Profit

2008-05-05T05:06:00.001-03:00

The China Post - 01/05/08

TAIPEI, Taiwan -- Quanta Computer Inc. and Compal Electronics Inc., makers of more than half the world's notebook computers, rose in Taipei trading to the highest in at least four months after first-quarter profits exceeded analysts' estimates. Quanta gained 5.5 percent to NT$50.70 at the close on the Taiwan Stock Exchange, the highest since Nov. 20. Compal advanced 5.3 percent to NT$34.05, its strongest since Dec. 31. Compal's profit increased 23 percent to NT$3.2 billion on orders from companies such as Dell Inc.