TPV, Philips tie up for monitor business

Taipei, Dec. 21, 2004 (CENS)--TPV Technology Ltd. Has signed a memorandum of understanding (MOU) on cooperation with Royal Philips Electronics of the Netherlands to shoulder a 1.5 billion euro-worth of contract business.

According to the MOU, Philips will get a 15% stake in TPV by purchasing new shares issued by the latter, becoming the second-largest shareholder in TPV trailing BOE Technology Group Co. Ltd. Of mainland China.

TPV chairman and CEO Jason Hsuan claimed that his company's new cooperation tie with Philips is expected to create a win-win situation for the two parties, adding that TPV expects to ship over 35 million monitors, or have revenue of over US$5 billion, in 2005.

The TPV-Philips MOU included clauses that Philips would pass about 700 million euro worth of original equipment manufacturing (OEM) business to TPV and place contract orders for 800 million euro worth of Philips-branded monitors and thin TV sets. In addition, TPV will take over Philips' plants in Suzhou (Jiangsu Province) and Dongguan (Guangdong Province), mainland China as well as manufacturing businesses in Hungary and Brazil, Hsuan. Philips will also transfer its OEM-production business unit and R&D center in Taiwan to TPV.

Gottfried Dutine, Philips' CEO and president of the company's consumer electronics division, pointed out that Philips would maintain its global monitor headquarters in Taiwan; monitor R&D centers and business units in Belgium and Singapore; monitor plants in France, Belgium, Hungary, Mexico, and Brazil. In the future, the CEO pointed out, Philips would concentrate on display-technology innovation and product designs. With such separation of its monitor-production units, Dutine said, Philips' profitability is expected to become stronger in 2006 and win more authorization royalty incomes.

According to Hsuan, BOE currently still holds a 25.4% stake in TPV. In the future, both BOE and LG.Philips LCD Co., Ltd. (LPL), a thin film transistor-liquid crystal display (TFT-LCD) panel venture between Philips and LG of South Korea, will be major suppliers of LCD panels, thus securing ample supply of such key parts.

Market survey showed that TPV currently turns out about 14 million cathode-ray tube (CRT) monitors and 10 million LCD monitors per year, and Philips about six million CRT monitors and four million LCD monitors. With the cooperation project, TPV will become the world's largest contract monitor producer with an annual production volume of over 35 million monitors, making it a "monster contract producer."

Industry sources said that the TPV-Philips cooperation project would be conducted totally on a share-swapping basis. The transaction value is estimated at US$358 million, the sources said.

TPV makes CRT and LCD monitors on a contract basis for customers such as IBM, Hewlett-Packard, Dell, and Mitsubishi. TPV also sells its own monitors under the AOC, Envision, and Amark brands. Founded in 1967 as Admiral Overseas Corp. (AOC), TPV originally made color TVs in Taiwan and has been manufacturing in mainland China since 1990.