Lite-On IT acquires optical disk drive operation of BenQ

Lite-On IT Corporation, Taiwan's largest optical disk driver maker, took over the optical storage department of BenQ, the second largest optical disk supplier in Taiwan, at a cost of NT$5 billion on April 10, a move which will enable Lite-On IT to overtake HLDS (Hitachi-LG Data Storage) and become the largest optical-disk supplier in the world.

Over the past two years, the global optical disk drive industry has witnessed many M&A (merger and acquisition) cases. The marriage between Lite-on IT and BenQ's optical disk drive department follows the merger between the optical disk drive departments of Sony and NEC. BenQ is expected to obtain NT$1.2 billion of cash from the merger, as well as 13% shareholding and two seats of board directors of Lite-on IT, making it the second largest shareholder of the latter.

By acquiring the optical storage department of BenQ, Lite-On IT will obtain the patent licensing of Philips, leading to reduction in its royalties outlays.

Experts noted that the integration of the global optical disk drive industry has become an irreversible trend. HLDS and Toshiba Samsung used to be the two largest camps in the global optical disk drive industry, and following the alliance between Lite-On IT and Philips/BenQ, the global market will enter an era of trichotomy.

Liao Hsueh-fu, president of Lite-on IT, pointed out that via the merger, Lite-on IT will acquire the contract-production and manufacturing business of BenQ's optical storage department, including product manufacturing, as well as technological and patent licensing. The base day of the separation and merger is set on June 1 preliminarily.

Li Hsi-hua, president of BenQ, pointed out that Philips BenQ Digital Storage (PBDS) used to be responsible for R&D and sales of optical disk drives, leaving the rear-end production to the hands of BenQ. In the future, the manufacturing works will be handed over to Lite-on BenQ, while PBDS will concentrate on sales and R&D of blue-ray optical disk drives.

Li Hsi-hua noted that "Talks for the merger has been undergoing for half a year. After the merger is completed, Lite-on IT can challenge the status of world No. 1 in production scale."

Shipment volume of PBDS topped 19.2 million units last year. In addition, BenQ is also undertaking contract production of optical disk drives for Microsoft's Xbox. After taking over the orders of BenQ, Lite-on IT is expected to boost its annual revenue by NT$20 billion. Plus the Sony NEC orders deriving from its strategic alliance with Sony, total shipment volume of optical disk drives by Lite-On IT is expected to hit 85 million units this year, overtaking HLDS to become the largest supplier in the world.

source & copyright: CENS