Chimei-Innolux Plans to Sell Production Equipment to Brazil

Taipei, Dec. 19, 2011 (CENS)--Eike Batista, the richest person in Brazil, has reportedly planned to join hands with a Brazilian bank and Hon Hai Group in establishing an FPD (flat panel display) plant in Brazil by procuring existing 6th or 7.5G equipment from Chimei-Innolux at several tens of billions of NT dollar.

The project, if materialized, will enable Hon Hai to expand its deployment, while helping Chimei-Innolux weather its financial plight.

In response to the news, Chimei-Innolux reported yesterday (Dec. 18) that the company is evaluating related projects. Hon Hai failed to respond to the report. The Brazil side reportedly dispatched a delegation to Taiwan to study the feasibility of the project recently.

Brazilian media revealed that Batista already signed an agreement with Brazilian bank BNDES and Hon Hai for the project recently. Initial investment will top US$4 billion, including US$500 million from Batista and US$1.2 billion from BNDES. Hon Hai intends to provide technology, without contributing fund. The investors intend to purchase the existing production equipment of Chimei-Innolux.

Chimei is considering selling its sixth- or 7.5th- generation plant to the project, with the former capable of turning out panels for use in tablet PC and TV and the latter mainly for the production of TV panels.

Sixth-generation plant is not the mainstream equipment on the market but still worth several tens of billions of NT dollar. The sales will greatly alleviate the financial pressure for Chimei-Innox, which has suffered red inks for six quarters in a row and is having difficulty in obtaining syndicated banking loans.

Brazil has a huge consumption market, with local sales of LCD TV topping 8 million units this year, for 40% growth. The country, however, doesn't have FPD plants. Hon Hai, therefore, has planned to set up LCD TV production base in the country.