Acorp, Tsinghua Tongfang to set up DVD player venture in Hong Kong

Dec 25, 2003 Ι Industry In-Focus Ι Electronics and Computers Ι By Quincy, CENS
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Taipei, Dec. 25, 2003 (CENS)--Taiwan's Acorp Electronics Corp. recently announced that its 100%-owned mainland Chinese subsidiary Hua Shun Technology (Shen Zhen) Co., Ltd. Would set up a joint venture with mainland China-based Tsinghua Tongfang Co. soon.

The new venture would be dubbed Tongfang Digital and be set up in Hong Kong in the second quarter next year at the earliest, Acorp said.

Industry sources said that Tsinghua Tongfang, the No. 5 personal computer (PC) brand in mainland China, is very optimistic about the future of the information appliance (IA) products and recently announced a project to pour 1 billion Renminbi into relevant fields. Tsinghua Tongfang said that it expects consumer electronic products to represent 80% of the firm's revenue and replace PCs as the company's major product category after three years.

Acorp., a motherboard maker listed on the Taisdaq (formerly over-the-counter) market, shipped about 600,000 boards last year and has successfully transformed into a supplier of multimedia and digital audio/video board products this year. Acorp said that it began planning to set up the new venture with Tsinghua Tongfang after Hua Shun received a contract production order for MPEG (moving picture experts group) cards used in digital versatile disc (DVD) players.

For the planned venture, Acorp chairman Tsang Wen-hua said that his company would reinvest in Hua Shun through another mainland-based subsidiary, the T-Top. Hua Shun would set up the new venture in Hong Kong with the spun-off IA business division of Tsinghua Tongfang. In the new venture, Tsung said, Tsinghua Tongfang would be the major shareholder and some other foreign shareholders would be introduced into the venture in the future.

Through the establishment of the new venture, Acorp will step into production of DVD players. Tsang said that Acorp would support the relevant product development works through its Taiwan headquarters and let Tongfang Digital produce DVD players in mainland China at Hua Shun's plant. The new venture is expected to further elevate Acorp's revenue from the audio/video business.

Tsang said that Tsinghua Tongfang's big orders have occupied Hua Shun's production lines and made the mainland subsidiary turn profitable since September this year. The chairman added that the new venture would decide on whether to allow Hua Shun to further expand its production capacity in the future.

In addition, Tsang said, Acorp has won the global agent right (outside mainland China) for Tsinghua Tongfang's brand DVD players and would help the mainland partner develop sales in the international market. For example, Tsang said, Acorp recently received an order for DVD players from the European branch of Akai, a Japanese home appliance brand, and would begin shipment this month.

In Taiwan, Acorp plans to start selling Tsinghua Tongfang's DVD players early next year by first targeting consumers at local hyper-market chains. The Taiwan company also plans to push own-brand DVD players in the high-end market in the future.

Acorp expects to have revenue of NT$3 billion (US$87.98 million at US$1: NT$34.1) next year, with the combined revenue ratio of DVD players and digital KTV products to outstrip that of motherboards. The profit margin is expected to be boosted to about 10% next year, Tsang said.
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