SAN JOSE, Calif. - Taiwan's Hon Hai Precision Industry Co., also known as Foxconn Technology Group, is the world's largest contract electronics manufacturer (CEM). Now, the company wants to dominate another market: LCDs.
Japan's Hitachi Ltd. is in talks with Hon Hai under which the Taiwan firm would buy a 50 percent stake-or a majority share-of Hitachi Displays Ltd., a subsidiary that produces LCD panels, according to reports.
If the deal goes through, the new venture would surpass Sharp Corp. as the world's largest supplier of small- and mid-size LCD panels, according to reports.
Foxconn, a major player in LCDs, wants to become one of the world's largest vendors in the arena. The company had at one time a 24 percent stake in one Taiwan LCD maker-Innolux Display Corp.
In 2009, Innolux Display acquired Taiwan LCD maker TPO Displays Corp. Then, Innolux acquired another Taiwan LCD maker, Chi Mei Optoelectronics Corp. And recently, Innolux Display announced the completion of its acquisition of Chi Mei Optoelectronics and TPO Displays.
The new entity is called Chimei Innolux Corp. Chimei Innolux is now a dominant player in the global TFT-LCD panel market. It sells from 1.5- to 50-inch. panels. By essentially gaining control of Chimei Innolux, Foxconn can now offer customers a one-stop shop of contract manufacturing services, including LCD production.
Hitachi Displays and Chimei Innolux are no strangers. In recent months, Hitachi Displays agreed to grant its IPS LCD technology to Taiwanese LCD manufacturer Chimei for the contracted production of medium-size IPS LCDs for use in tablet PCs and other products.
Chimei Innolux started the mass production of medium-sized IPS LCDs in 2010. IPS (In-Plane Switching) technology is a TFT liquid crystal technology that was put to practical use by Hitachi in 1996. ''With IPS, liquid crystal molecules rotate in a plane parallel to the TFT substrate when an electric field is applied horizontally,'' according to Hitachi. ''This results in superior performance in terms of viewing angles and better response speeds for color purity and half tones.''
Meanwhile, recently, Panasonic Corp., Hitachi, and Hitachi Displays announced that Hitachi Displays conducted a corporate split to establish IPS Alpha Support Co. Ltd. IPS Alpha Support will assume Hitachi Displays' entire shareholdings of IPS Alpha Technology, which designs, manufactures and sells large-sized LCD TV panels.
As a result, Hitachi Displays now specializes in small-to-medium-size displays. November 2010 shipments of large-area TFT LCD panels were 61.4 million units, up 9 percent from October, and revenues were 6.9 billion, up 6 percent month-over-month, according to DisplaySearch. These results surpassed the previous record reached in May 2010.
On a unit basis, LG Display was the leader with 27.5 percent market share, followed by Samsung with 23.5 percent, Chimei Innolux with 17.8 percent, and AUO with 15.8 percent. On a revenue basis, Samsung led with a 25.5 percent market share, followed by LG Display with 25.3 percent, AUO with 16.4 percent, and Chimei Innolux with 14.3 percent, according to the firm.
Slate/mini-note (5.0- to 11.6-inch) panel shipments were 7 million in November, maintaining the high level set in October. Within the 7 million, 9.7-inch iPad panel shipments were 2.8 million.
Meanwhile, in 1974, Taiwan's Hon Hai was founded and started by making cheap plastic parts for TVs. Then, in the 1980s and 1990s, it branched out into low-end connectors and cable assemblies. More recently, it moved into the CEM front.
From that humble start, Hon Hai, whose public face is the Foxconn brand, has grown to become the world's largest contract electronics manufacturer, with 2010 sales expected to come in at NT$3 trillion ($98.4 billion), up from NT$1.96 trillion ($64 billion) in 2009. Hon Hai makes the iPhone and iPad for Apple, along with products for Dell, Hewlett-Packard, Sony and countless others.
But Foxconn is battling an image problem that surfaced in January, when a 19-year-old male employee was found dead of an apparent suicide at a Foxconn facility in Shenzhen, China. A string of suicides followed among the company's Chinese staff.
What I find most interesting is yet another Japanese company teaming up, in a very real way, with a Taiwanese company so as to be more competitive. Now, will Foxconn combine their assembly and LCD tech to disadvantage the competition or will it really mean lower prices and better selection for the consumer due to better competition?
I wonder if the move was purely for CEM purposes or if they are positioning themselves for the growing LCD market? If they pick up the 50% share of Hitachi Displays Ltd how much of the overall LCD market will they control?
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