Optimistic about the market outlook of energy-saving lighting, Chi Mei Optoelectronics Corp recently announced it would buy a 3.4 percent stake in China Electrical Mfg Co Ltd and a 40 percent stake in TOA Optronics Co Ltd, a China Electrical affiliate, for NT$850 million.
The acquisition makes Chi Mei the largest institutional shareholder of China Electrical, Taiwan`s No.1 lighting manufacturer, entitling it to hold seats on TOA`s board. TOA is 100 percent owned by China Electrical and produces cold cathode fluorescent lamps (CCFLs) as well as hot cathode fluorescent lamps (HCFLs).
Chi Mei executives pointed out that their company would acquire such stake by buying the two companies` existing shares via a Chi Mei-owned investment arm. The company would spend NT$250 million ($8.3 million) on the China Electrical shares and NT$600 million ($20 million) on the TOA shares.
Some industry watchers believe such investment sets up Chi Mei to become closer to LCD rival AU Optronics Corp. (AUO) considering that China Electrical is the parent of CCFL maker Wellypower Optronics, in which AU holds a 9.07 percent stake. CCFL is currently the overwhelming backlight for LCD panels that are major products at AUO and Chi Mei.
Chi Mei has its own CCFL and LED affiliates, whose products are limited to backlight purpose. China Electrical has applied its CCFL and LED to lighting purposes to be in tune to green trends.
Chi Mei`s President, JY Ho, said the investment has a two-fold purpose: to secure sufficient supply of lamps for backlight modules, and to enable the firm to venture into the green sector.
Industry watchers pointed out that Chi Mei`s acquisition of the two lamp makers` shares suggest lucrative business opportunities to be derived from green trends, which is drawing hi-tech manufacturers to the business. However, newcomers tend to team up with experienced lighting makers to minimize cross-industry impact and different business models.
