Lite-On wins contract order for foldable cell phones from Hitachi

Taipei, Dec. 15, 2003 (CENS)—Taiwan's Lite-On Technology Corp. recently won a contract order for a foldable color-display cell phone model from Hitachi Ltd. Of Japan and the Taiwan company is scheduled to begin the first batch of delivery this month.

The Hitachi-ordered cell phone model would mark Lite-On's venture into the production of foldable handsets.

Industry sources said that Hitachi has never produced global system for mobile communications (GSM) cell phone model before, and the new GSM handset model it contracted Lite-On would be made in Taiwan and first be vended on the island. The sources said that Hitachi has mapped out a series of models based on product blueprints in GSM handset segment but would make final decision according to the market response.

Most industry analysts deemed that Hitachi's contract business would bring only limited profits to Lite-On, which currently also supplies products to Sony-Ericsson, Alcatel, Siemens of Europe, LG of South Korea, and several customers in mainland China. With the new Japanese customer, Lite-On will boast the most comprehensive customer list among local counterparts.

Lite-On shipped 393,000 handsets in November and about 3.7 million units in the first 11 months. The company estimated its annual shipment at four million units this year, about the same level as last year. Lite-On has not announced its next-year operation goal but some institutional investors estimated that the company is expected to ship about 7.5 million cell phones next year.

Lite-On's profit margins in its cell phone contract production business, however, are relatively low due to the company concentrating on mainly original equipment manufacturing (OEM) production of low-level handset models. For example, the company's average unit price of its shipment was about only NT$1,700 (US$49.85) last month.

Hitachi once also contracted some local companies to supply wireless communication products, including a wireless personal digital assistant (PDA) model developed by Compal Electronics Inc. for sales in the North American market.

Industry sources said that Casio and Hitachi jointly announced plans last month to set up a new venture in cell phone development to cut costs and market products globally. Both Casio and Hitachi currently produce and sell some code division multiple access (CDMA)-2000 1X standard handset models in Japan and after the establishment of the new venture they will still market their handsets with own brands.

The sources said that the Casio-Hitachi cell phone venture would be set up in April next year with an initial capitalization of 3 billion yen, in which the former holds a 51% stake while the latter 49%. The scheduled venture, designed to integrate the two companies' relevant resources, will still focus on the development and manufacturing of CDMA handset in the initial stage and then will accelerate the speed of new product development.