On Aug. 14, China Electric Manufacturing Corp. (CEMF) made a decision to form a joint venture with LCD suppliers and other companies while maintaining over 60% ownership. AU Optronics (AUO) had interest in acquiring a stack in CEMF but the asking price (NT$26/share vs. NT$18/share target price) was too much for AUO. AUO still has a 10% equity share of Wellypower Optronics Corp., an affiliate of China Electric.
The joint venture intends to build three production lines with a target mass production date of first quarter 2007 with an initial monthly capacity of 1.5 million CCFLs. This will add to the production capacity of CCFLs, but there is worry that an over supply situation might be just around the corner. Taiwan Fluorescent Lamp Co. Ltd., CEMF’s nemesis, recently diversified into CCFL production as did Chi Mei (CMO) and Delta Electronics. NEC and Panasonic has also opened CCFL factories in Taiwan.
Although CCFL demand will likely grow in light of growth in LCD TVs, which require substantially more per unit compared to LCD monitors and notebook PCs, there is a trend toward LED-based backlighting at the high-end of the spectrum that tend to be largest in size. LED-based backlighting will quickly filter down to smaller sizes as thermal management becomes better allowing for smaller quantities resulting in lower costs.