untitled

2011

Prepared by

Ferhat Ünlükal

5/1/2011

BUSINESS AND TECHNOLOGY REPORT


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BUSINESS AND TECHNOLOGY REPORT APRIL 2011

Consumer Electronics (CE)

Samsung

Business

Samsung Electronics has suffered a sharp fall in first quarter earnings, hit by weakness in its liquid crystal display business and price competition in tablet computers. The manufacturer of the Galaxy S smartphone and Galaxy Tab tablet said Thursday operating profit for the first three months of 2011 will fall to between 2.7 trillion won and 3.1 trillion won ($2.85 billion) from 4.41 trillion won a year earlier. It will release a full earnings report at the end of the month. Consolidated revenue for the three months ended March 31 is expected at between 36 trillion won and 38 trillion won. The Suwon, South Korea-based company recorded sales of 34.64 trillion won in the same period last year.

Samsung Electronics said first-quarter profit fell 30 percent on declines in memory chip prices and reduced profitability in liquid crystal displays and flat screen televisions. Samsung, the manufacturer of the Galaxy S smartphone and Galaxy Tab tablet computer, earned 2.78 trillion won ($2.59 billion) in the three months that ended March 31, it said Friday. That compared with net profit of 3.99 trillion won a year earlier.

Samsung’s stock performance

China TV Market

Samsung and LG, South Korea's two major electronics manufacturers, said Wednesday (April 6) they will aggressively target the Chinese market this week by introducing this year’s new line-up of 3-D televisions and wireless gadgets at an expo in Shanghai. Last year, Samsung and LG Electronics recorded a market share of 3.9 per cent and 3.8 per cent, respectively, in the Chinese market, following their Japanese rivals Sharp and Sony which posted their stakes at 4.6 per cent and 4.5 per cent. Chinese brands - Hisense, TCL, Skyworth, Changhong and Konka - took up more than 70 per cent of the Chinese TV market last year.

3D

Today Samsung announced that starting April 24, two pairs of its base 2011 3D glasses, model SSG-3100GB, would be included with every Samsung 2011 3D TV free of charge. The company has also reduced the price of additional sets of 3100GB glasses from $129 list to $50 each, effective May 1.Samsung's glasses are powered, active-shutter models, which use Bluetooth to synch with the TV as opposed to the Infrared synching used by the 2010 versions. These new


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glasses are incompatible with Samsung's 2010 3D TVs.

Tablet PC

Samsung is set to challenge the iPad 2 with a cheaper, Wi-Fi only version of the 7-inch Galaxy Tab that will land on store shelves by Sunday and sell for $350.

Smartphones

Samsung shipped 68.9 million handsets worldwide during the first quarter of 2011, rising a relatively sluggish 7% from 64.3 million units a year earlier. Its global handset marketshare has dipped from 22% to 20% over the past year, due to rising competition in 2G and 3G touchphone markets.

Samsung will launch the Samsung Galaxy S Plus smartphone sporting a 1.4GHz processor in the Russian market this May 2011. According to several news sites, the new smartphone will be marketed as the Galaxy S 2011 edition in Russia and it will be made available to other countries as the Galaxy S Plus.

Operating System – OS

Samsung will reportedly release the second version of its proprietary smartphone OS, bada 2.0, in July of this year. It is said that the second version of the bada OS, which debuted only 10 months ago, will be first launched in India. The next version of bada will bring features such as NFC support and 3rd party social networking integration. The home screen is also expected to see a redesign with more information displayed on it. Samsung will also release an SDK for Linux and Mac, which will open development to a greater number of users. India is where Samsung has reportedly had the most traction for bada, so that is why the next version will be released there first. "We currently have a market share of 10-15% in the smartphone segment in

India, and with Bada, we are targeting about a share of 30% in this segment this calendar year," said Dipesh Shah, head of R&D at Samsung Mobile. Samsung has a large R&D center near Bangalore, with 2,000 engineers working on bada and applications for it

Storage Technology

Seagate Technology plc (NasdaqGS: STX - News) announced the signing of a definitive agreement with Samsung Electronic Co. Ltd. to extend their strategic ties. The agreement encompasses various issues, expected to be beneficial for both companies, going forward. The deal was announced in conjunction with the third quarter results. Under the terms of the agreement, Seagate will acquire Samsung’s Hard Disk Drive (HDD) business unit. Seagate will pay a handsome $1.375 billion, 50% in cash and 50% in the company’s shares. This translates to $687.5 million in cash and $687.5 million worth of roughly 45.2 million shares; approximately 9.6% ownership interest in Seagate. Moreover, Samsung will also have the opportunity to designate one member to Seagate’s board of directors. Apart from this, Seagate and Samsung extended their existing patent cross-licenses, entered into a NAND flash agreement and a disk drive supplier agreement for Samsung PCs and consumer electronics, also agreeing to co-develop enterprise storage solutions. Seagate expects that the strategic agreements to significantly expand its customer access in China and Southeast Asia.

Patent Issues

Samsung Electronics Co. sued Apple Inc. claiming patent infringement, a week after the iPhone maker filed a complaint in U.S. federal court alleging the South Korean company copied its products. Samsung submitted complaints to courts in Seoul, Tokyo and Mannheim, Germany, alleging that


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Apple infringed patents related to mobile-communications technologies, Samsung said in an e-mailed statement Friday.

Batteries

Samsung SDI, which supplies batteries to Apple and Samsung Electronics, plans to spend 390.5 billion won this year on new facilities for lithium-ion batteries.

LG

Business

LG Electronics, a major global manufacturer of flat screen televisions and mobile phones, lost 15.8 billion won ($14.6 million) in the three months ended March 31 compared with a net profit of 674.6 billion won a year earlier, the company said in a regulatory filing Wednesday.

LG’s stock performance

3DTV

LG Electronics (LGE) expects its share of Taiwan's LCD TV market to expand to 25% in 2011, from 14% in 2010, and sales of 3D TVs will account for 5% of total LCD TVs it sells in the local market for the year. Buoyed by the company's aggressive efforts to promote 3D TVs built using passive polarized 3D panels, LGE has managed to more than double its share in the 3D TV segment in Korea to 65% recently

from the previous 30%, according to LGE Taiwan. The penetration rate of 3D TVs in the LCD TV segment in Korea has reached 25% currently compared to a ratio of 12-13% in 2010, said LGE Taiwan, noting that the size of the LCD market in Korea tops 2.5 million units at present.

LG Electronics has announced plans to take advantage of its technological lead over its rivals in 3D technology with an upcoming release of its new Cinema 3D TV range, a diverse line-up of TVs equipped with LG’s next-generation Cinema 3D TV technology. LG is looking to take the fight to the market in a looming technology format war around 3D technology and welcomed comments from Hollywood director James Cameron who spoke of his preference for polarised glasses because they would “accelerate adoption of 3D into the home”.

Mobile TV

LG Electronics has a mobile digital TV (MDTV) that displays 3D images and delivers social networking services like Twitter, all on a device that fits in the palm of your hand, the company said Monday. The company said its prototype 7-inch receiver will be demoed this week at the 2011 National Association of Broadcasters Show in Las Vegas. The device will be the first MDTV that displays 3D images broadcast via the ATSC Mobile DTV Standard, according to LG Electronics.

Tablet PC

Even though the upcoming LG’ G-Slate tablet won't require the use of 3D glasses, it will come with a pair of glasses anyway.

ARM

LG Electronics on Tuesday announced it had signed a license for ARM's


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upcoming application and graphics processors, opening a path for the device maker to design a new chip and expand in the market of smartphones and tablets.

OS – Meego

LG is said to be in talks to adopt MeeGo, an open source platform, on some or all of its smartphones, reports Reuters. ZTE and China Mobile may also be developing handsets based on the fledgling, still unfinished operating system.

LED LCD Monitor

LG Electronics (LG) was the world's market leader in LED LCD monitors in 2010 with an 18 percent market share - accounting for 2.92 million of 16.68 million LED LCD monitors sold around the world - according to global market research firm DisplaySearch.

IC Shortage in home appliance division

Consumer electronics firm LG Electronics Inc. said Tuesday (April 19) that its home appliance division faces a shortage of ICs from Japan and is seeking alternative suppliers, according to a Dow Jones report. The "supply-demand imbalance" is believed to be due to the earthquake and tsunami that hit Japan on March 11 and has kept a number of wafer fabs shut since then. In addition LG Electronics has relied heavily on Toshiba, one of the chip companies whose fabs have been affected. "We've been sourcing about 70 to 80 percent of semiconductors for our home appliances from Japanese companies but we are fast diversifying the suppliers," Dow Jones quoted Lee Young-ha, president of LG's home appliance division, as saying. It is believed that Hynix Semiconductor Inc. and Panasonic are two companies that have been asked to increase their supplies to LG Electronics. Lee said he expects global chip supplies to return

to normal within two or three months, according to the report. LG will continue to diversify its supply chain even after the situation has improved in Japan. It may also have to raise prices of its equipment by about 5 to 10 percent because of higher raw materials costs, the report said.

Energy

This year LG announced its plans to become a major player in global energy solutions market by introducing the 3rd version of existing tropical Multi V III, and the newly released VRF Air Handling Unit (AHU) within the Middle East and Africa (MEA) markets. The Multi V III boasts a 4.6 coefficient of performance (COP) for heating and 4.3 for cooling, as well as a bigger capacity per unit with an extended piping length of 1,000m. In addition, LG's HSS Inverter Compressor greatly enhance efficiency on the Multi V III, reducing energy use by up to 11 percent compared with previous models. Moving beyond its traditional role as a leader in air conditioning, LG is making a foray into the energy business, with solutions including LED lighting and solar power. LG plans to invest US $500 million as it ramps up its workforce and R&D, with a further aim of hitting US $10 billion in global sales by 2013.

South Korea's LG Chem on Wednesday completed what it described as the world's largest battery plant for electric cars and vowed to become a major producer by 2015. The company said the factory in Ochang, south of Seoul, has enough capacity to produce lithium-ion batteries for 100,000 of the green autos a year. And LG Chem, part of the LG group, said it would spend two trillion won (US$1.84 billion) on building one more plant in South Korea and another in the United States over the next two years. When completed, LG Chem will be able to make batteries for 350,000 vehicles a year, and the


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firm said it was aiming to increase its share of the global electric-car battery market to more than 25 percent by 2015. It predicts the global market for electric car batteries will grow rapidly to 16 trillion won in 2015 from the current 1.5 trillion won amid soaring oil prices and tougher environmental rules on emissions.

Electronic Recycling

LG Electronics USA is leveraging its leadership in electronics recycling during the Great American Cleanup, the nation's largest green volunteerism program, organized by Keep America Beautiful. "In 2010, volunteers across the country recycled 7.2 million pounds of consumer electronics during the Great American Cleanup, and we expect that figure to be topped in 2011," said Wayne Park, President and CEO of LG Electronics USA, the exclusive Consumer Electronics National Sponsor of the Great American Cleanup, which runs through May 31. The LG Electronics Recycling Program provides consumers with a convenient and responsible way to dispose of used, unwanted, obsolete or damaged consumer electronics products, he said. In 2010, separate from the Great American Cleanup, LG recycled more than 8 million pounds of home electronic products in the United States, free of charge to consumers. "After recycling their old products, consumers can save energy by upgrading to ENERGY STAR qualified products," Park said, encouraging consumers to join LG in taking the "Change the World, Start with ENERGY STAR" pledge and save energy by recycling old products. U.S. consumers' purchases of LG ENERGY STAR qualified products in 2010 will save about $650 million in utility costs and will reduce greenhouse gas emissions by nearly 4 billion pounds over the lifetime of these products.

Sony

Business Financial report

Sony (SNE) is pushing back by a few weeks the release of its fiscal 2010 results as it continues to gauge the impact of Japan’s devastating earthquake and tsunami on its operations. The Japanese consumer electronics maker will release the results for the year ended March 31 on May 26, later than its usual reporting date in mid-May. Last year the company revealed its 2009 results on May 13.

Sony’s stock performance

Connected TV

Sony will focus its LCD TV business operation on Internet-connected models in 2011 fiscal year (April 2011-March 2012), with these sets' share of total LCD TV shipments expected to rise to 50%, according to Sony's Home Entertainment Department general manger Toshiro Kawata in Taipei on April 14. Global LCD TV demand will reach 220 million in 2011, and 64 million units or 29% of them will be Internet-connected models, Kawata indicated. The Taiwan market will have an estimated size of 1.1 million LCD TVs in 2011, with Internet-connected models sharing 55% compared to 20% in 2010, the company said.

It was pretty much established that Google TV wasn't ready for prime time


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when it launched last fall, and now comes more proof. Logitech has reported that the company's Revue with Google TV set-top box and the accompanying gear generated only about $5 million in sales during the last quarter. That's only about 72 percent less than the $18 million Logitech had expected. This was first reported by Janko Roettgers at the blog GigaOm. One day I hope to learn why Google TV was rushed out. It wasn't like there weren't already plenty of risks posed by wedding the TV to computer software. Google TV is a software platform that comes equipped with the Android operating system and Google's Chrome browser.

Sony has released a firmware update for its Bravia televisions that adds Skype functionality as well as the ability to use smartphones and notebooks as remote control devices.

3D

Sony is delaying the launch of its 3D Handycam video camera by roughly a month due to difficulty securing parts following the March 11 earthquake in Japan.

Tablet PC

Sony Corp. (6758) introduced its first tablet computers, following Samsung Electronics Co. and Motorola Mobility Holdings Inc. in their pursuit of Apple Inc., a year after the iPad spurred a surge in demand for the devices. The maker of Vaio laptops will use Google Inc. (GOOG)’s Android operating system for the tablets, Kunimasa Suzuki, Sony’s head of personal computers, said in Tokyo today. The models, whose prices weren’t disclosed, would go on sale in autumn, the company said in a statement. Sony is last among the world’s top 10 laptop makers to unveil tablet plans, aiming to capitalize on surging demand for a product category that research firm Strategy Analytics forecasts will grow to $49 billion by 2015. The late entry may

undermine the company’s ability to challenge Samsung’s Galaxy Tab or the iPad, according to Deutsche Bank AG.

Game Console

Sony has reportedly ended production and shipment of the PSPgo, meaning the device could be discontinued just 18 months after its launch.

Sony is being sued in US court by gamers irked by news that a hacker cracked PlayStation Network defenses and pilfered data that could potentially be used for fraud or identity theft. Credit card lenders could be facing more than $300 million of card replacement costs if customers affected by the Sony Corp (6758.T) data breach decide to replace their credit cards. Analysts have previously estimated that the incident could cost Sony more than $1.5 billion, but this is the first time they have put a price tag on how much major lenders will also suffer.

Sony CEO Howard Stringer and Bloomberg have confirmed that the Android-powered PlayStation gaming tablet is real, and coming sometime before the end of 2011. However, with the company's wobbly financial record, product delays, and the incredibly tough competition it faces from the Nintendo 3DS and Apple's iPad, Sony is going to have a hard time selling these tablets.

Sony Pictures Entertainment (SPE) announced it has acquired the on-line game company Verant Interactive, Inc. and named digital gaming executive Kelly Flock as president and CEO of Sony On-line Entertainment (SOE).

Mobile

Flash memory company SanDisk, along with content studio Sony Pictures Entertainment and mobile carriers SoftBank Mobile and Orange, are working on an IEEE draft standard that seeks to tackle the mobile network traffic problem created when too many


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people watch streaming video at the same time. The standard, called HQME (High Quality Mobile Experience) partitions off a section of a phone's memory and automatically caches the most popular web media content when network traffic is at its lowest.

Network Camera

Sony is pleased to announce the formation of a business partnership with U.S. semiconductor manufacturer Intersil Corporation, for worldwide development of the industry's first network camera capable of simultaneously transmitting both analog standard- and digital high-definition images over a single coaxial cable. Sony aims to introduce this new Hybrid Camera to the market in the latter half of 2011 as part of its lineup of security cameras.

Sharp

Business

Sharp said its annual profit more than quadrupled due to brisk demand for liquid crystal display screens but warned the earthquake and tsunami that hit Japan last month will have a "broad" impact on its business. Osaka-based Sharp Corp. said Wednesday that its net profit for the fiscal year ended March 31 surged 341 percent to 19.4 billion yen ($237.4 million) from 4.4 billion yen the previous fiscal year. The result was below its October forecast for a 30 billion yen net profit due to supply chain damage from the March 11 disasters and costs from LCD plant improvements. Sales increased 10 percent to 3.021 trillion yen ($37 billion), with revenue from LCD displays used for game consoles, tablet computers, TVs and smartphones increasing 21 percent to 614.3 billion yen. LCD TV sales were especially robust in China, where Sharp sold 2.18 million of the devices, up from 1.18

million a year earlier, Sharp spokesman Toshiyuki Matsumura said.

Sharp’s stock performance

Toshiba

Business

Toshiba said in January it expected full-year net income of 100 billion yen ($1.2 billion), compared with a loss of 19.7 billion yen a year earlier. Revenue and operating profit may fall short of Toshiba’s January estimates, Sasaki said today. Toshiba is expected to report net income of 94.2 billion yen for the year ended March 31, according to estimates compiled by Bloomberg. The company is set to announce its earnings outlook for the fiscal year 2011 on May 9. Toshiba has forecast an operating profit of 250 billion yen for the financial year that ended in March, compared with an analyst consensus of 254 billion, based on a survey of 22 analysts by Thomson Reuters I/B/E/S. In 2006 it acquired a majority stake in Westinghouse of the United States for $5.4 billion in a bid to become a global player in nuclear power. Toshiba's nuclear power business had targeted annual revenue of 1 trillion yen and orders for 39 nuclear reactors by the financial year ending in March 2016.

Toshiba Corp said on Tuesday it likely fell short of its operating profit estimate for the past business year by 4 percent after last month's massive earthquake and tsunami affected operations at


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some of its plants. In a sign that the aftermath of the disaster may continue to cause problems for Toshiba in the current financial year, South Korea's LG Electronics has diversified its chip suppliers to reduce reliance on Toshiba, an LG official told Reuters. The Japanese electronics maker said on Tuesday it now expects an operating profit of 240 billion yen ($2.9 billion) for the year ended in March, 10 billion yen short of its prior projection. But the company revised up its net profit estimate to 135 billion yen from 100 billion yen. A spokesman said that restructuring costs had been lower than expected and that the company had sold off some real estate. The latest business year will mark Toshiba's first year in the black on a net basis in three years. It posted a 19.7 billion yen net loss in year to March 2010. Toshiba lowered its sales estimate to 6.4 trillion yen for 2010/11 from 6.6 trillion yen, following damage and electricity shortages at factories from the disasters.

Toshiba’s stock performance

Tablet PC

Toshiba will launch its first tablet computer in late June in Japan and at around the same time in global markets, the company said Wednesday. With the tablet, Toshiba will kick off an attempt to gain a 10 percent share of the global tablet market by 2013, said Masaaki Oosumi, president of Toshiba's digital products and services unit, at a Tokyo news conference. The company

is one of the oldest and most well-known names in laptop computers, so its entry is likely to further raise competition in an increasingly active market.

3D Notebook

Toshiba has unveiled the dynabook Qosmio T851/D8CR, which the company claims is the world's first glasses-free 3D notebook able to display 3D and 2D content at the same time on one screen, adding that the new notebook will be available in the Japan market from late July 2011.

Digital Signage

Toshiba TEC, the Toshiba subsidiary that handles the group's non-PC digital products, has purchased a 12% stake in Yeahpoint, a Brisbane-based supplier of self-service and digital signage products.

NAND Flash

Toshiba America has announced that it is expanding its offering of NAND Flash memory by introducing SmartNAND, a new family of Flash based on a new 24nm production process that integrates a control chip with an error correction code (ECC). The new 24nm SmartNAND will replace current-generation 32nm devices, utilizing a faster controller and internal interface that result in faster read and write speeds, and overall performance. Toshiba claims read speeds may be up 1.9 times faster than current models, and write speeds 1.5 times faster. SmartNAND is also designed to support four read modes and two write modes, and to support a special "power save" made for low-power requests.

Healthcare

Toshiba Medical Systems Corp. will buy Vital Images Inc. for about $273 million in a move to boost its medical software


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offerings for the health care field, the companies said Thursday.

Panasonic

Business

Panasonic, the biggest Japanese maker of consumer electronics, announced a major reorganization Thursday under which it will cut thousands of jobs as it adapts its business to a changing global environment and absorbs recent acquisitions. It will streamline operations along three main lines, down from five, and said it would cut about 17,000 jobs over the next two years from its work force of 367,000, which is already down from the 385,000 people it employed at the end of March 2010. The reorganization will cost about ¥160 billion, or $2 billion, the chief executive of Panasonic, Fumio Ohtsubo, said in Osaka, where the company is based. The company, formerly known as Matsushita Electric Industrial, is restructuring to compete with South Korean and Chinese rivals in an industry that is increasingly focusing on emerging markets. It is also eliminating redundancies caused by its acquisitions of Sanyo Electric and Panasonic Electric Works, which were completed this year. Already facing sluggish demand in Japan, its biggest market, Panasonic said the devastating earthquake and tsunami that struck the Japanese coast north of Tokyo on March 11 had further dimmed the domestic outlook. Mr. Ohtsubo said he expected the restructuring to contribute ¥60 billion ultimately to Panasonic’s annual operating profit, largely from increased sales of solar cells, lithium-ion batteries, LED lighting and air-conditioning equipment. Panasonic has a goal for sales of ¥9.7 trillion for the business year that ends March 2013. It said Thursday that its sales in the year through March 31 rose 17 percent, to ¥8.69 billion, though results were enhanced by the inclusion of Sanyo

Electric’s sales. It reported net profit of ¥74 billion, compared with a year-earlier loss of ¥103.5 billion.

Panasonic’s stock performance

Lithium-ion Batteries

Panasonic Corp will shift more of its output of lithium ion batteries to China from Japan, aiming to slash production costs and maintain its top share in the global market, the Nikkei business daily reported today. Japanese makers led by Panasonic are battling South Korean makers such as LG Chem and Samsung SDI to win the biggest share of the market for lithium batteries used to power computers, mobile phones, hybrids, electric vehicles and other consumer products. Panasonic will invest ¥20 billion-¥30 billion (RM735 million-RM1.10 billion) by the end of 2012 to build a new plant in China and to upgrade facilities, the Nikkei said without citing a source. Under the plan, it aims to cut manufacturing costs by 30 percent while boosting its share of output for the batteries in China to 50 percent by 2015, the Nikkei said. It currently makes 80-90 per cent of its lithium ion batteries in Japan, and the rest in China. Panasonic plans to triple sales of the batteries, including those for cars, to ¥1 trillion by that time compared with levels in fiscal 2009/10, the Nikkei said.


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MEMS for medical electronics

Panasonic Corp plans to enter the

microelectromechanical systems(MEMS) market and develop and commercialize MEMS sensors and devices from this year, the Nikkei business daily reported. The company is looking to develop MEMS components for use in blood pressure sensors, micro pumps for measuring blood flow and bio-sensors for tracking changes in temperatures and enzymes, the paper said.

Philips

TV Business

Philips announced it will spin off its lossmaking television division into a joint venture with Chinese TV manufacturer TPV Technology, resolving analysts’ long-standing concerns that the division was dragging group results down. The joint venture, which will have a licence to market televisions in Europe under the Philips brand, was the first major move by new chief executive Frans van Houten, who took over at Philips on April 1.

Philips’s stock performance

Nokia

Mobile Phones

Nokia Oyj, the world’s biggest maker of mobile phones, reported a 1.4 percent

decline in first- quarter profit and forecast operating margins from the handset business will fall this quarter. Net income was 344 million euros ($503 million), compared with 349 million euros a year earlier, the Espoo, Finland-based company said in a statement today. Profit beat the 177 million- euro average of 19 analyst estimates compiled by Bloomberg. Sales rose 9.2 percent to 10.4 billion euros.

Nokia’s stock performance

GE

Energy

GE is taking aim at the world's biggest solar company in a bid to expand into a fast-growing renewable energy market. General Electric Co. announced Thursday that it would spend $600 million to build the nation's biggest solar panel factory. It would build the same type of so-called thin film solar panels manufactured by First Solar Inc., the biggest producer of solar panels in the world. GE also announced Thursday that testing by a government laboratory showed that its panels set an efficiency record for this type of thin film panel, made from the elements cadmium and tellurium. "It's demonstrated to be the cost leader in the marketplace and we think we can push costs lower, and faster," said Vic Abate, vice president for GE's renewable energy business.


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GE’s stock performance

Vestel

Connected TV

Vestel, one of the largest TV manufacturers in Europe, and SoftAtHome, a software provider of home operating platforms that help service providers deliver convergent applications for the digital home, are announcing today that they have collaborated to develop the first Connected TV for operators. With the joint solutions and for the first time, IPTV operators worldwide can also offer premium IPTV services including Live TV, PVR and VoD over a Connected TV. Operators are no longer required to deploy a Set Top Box (STB) and can thus simplify the home network and in the mid-term reduce the investment costs in hardware.

IPTV

YouView, the BBC-backed IPTV venture, has announced more hardware partners and has released the final technical specification for its set top boxes. The new device partners include Huawei, Manhattan3, Vestel and Pace, which also develops digiboxes for Sky. They join Cisco, Humax and Technicolor who have all confirmed they will develop YouView

set top boxes in time for the platform’s planned launch in the first half of 2012.

Foxconn

Business

Foxconn International Holdings Ltd. (2038), the Hong Kong-listed unit of the Foxconn Technology Group, posted a full-year net loss that was wider than analysts estimated as costs increased and sales shrank. The shares fell. The net loss was $218.3 million, or 3.06 cents a share, compared with net income of $38.6 million, or 0.55 cent, in 2009, Foxconn said in a Hong Kong stock exchange filing yesterday. The mean estimate of seven analysts surveyed by Bloomberg was for a net loss of $202 million. Sales at Foxconn International fell to $6.63 billion from $7.21 billion in 2009, according to the statement.

Foxconn’s stock performance

Sony LCD TV Business

Taiwan-based Foxconn (Hon Hai Precision Industry) has reshuffled its R&D staff to prepare for production of Sony's LCD TVs to be launched in the US market in the second half of 2011, an initial step to transform its role in production of Sony's Bravia LCD TVs from an EMS provider with joint design


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with Sony to an ODM (completely responsible for design) maker, according to industry sources in Taiwan. Foxconn's upgrade in role is to enhance its partnership with Sony following the acquisition of Sony's overseas LCD TV factories, the sources pointed out. Becoming the largest producer of Bravia LCD TVs, Foxconn is expected to land orders for about 14 million units from Sony in 2011, the sources indicated. Sony for the first time outsourced production of high-end LCD TVs to Taiwan-based makers in 2011, and plans to increase the proportion of total output for such outsourced production in 2012, the sources indicated. Foxconn's transition from EMS to ODM will help it compete for ODM orders for Sony's high-end LCD TVs in 2012, the sources pointed out.

Production in Brazil

Brazilian President Dilma Rousseff said Foxconn Technology Group may spend $12 billion over five to six years to expand production in the country, in what would be the Taiwanese company’s biggest investment overseas.

LCD panel cooperations

Foxconn Electronics (Hon Hai Precision Industry) has reportedly formed a task force aiming to help distribute TFT-LCD panels from Japan-based Sharp, according to industry sources. Foxconn declined to comment. Sharp has recently decided to temporarily suspend production at its 8G and 10G LCD panel plants due to a shortage in the supply of natural gas, said the sources, noting that the two plants are expected to resume operations on May 6 at the earliest. The 10G plant has a capacity of 72,000 panels, while the 8G plant has a capacity of 100,000 panels. With Sharp's LCD panels having a penetration rate of over 50% in Japan's LCD TV market, the recent earthquake which hit Japan on March 11 will have

a strong impact on sales of LCD panels from Sharp, the sources asserted. As Foxconn is currently the OEM LCD TV maker for Sony, Foxconn is expected to persuade Sony to purchase needed flat panels from Sharp initially, the sources indicated.

Game Console

Taiwan-based EMS provider Foxconn (Hon Hai Precision Industry) will exclusively assemble Wii 2, a next-generation games console featuring body-sensing control like Kinect, for Nintendo, with shipments to begin in October 2011, according to Chinese-language newspaper Economic Daily News (EDN). In response, Foxconn declined to comment.

Electric Car

Chinese automaker Jianghuai Automobile (JAC) has partnered with Taiwan-based Foxconn Technology Group to collaborate in development of new-energy automobiles and automotive-electronic R&D and commercialization. Under the agreement, both the companies will work on new-energy vehicles, battery technologies and engage in R&D of automotive electrical systems, weight-cutting magnesium-aluminum alloy, in-car monitor, LED lighting among others. It will mainly focus on systemization, modularization, standardization and commercialization. The agreement, which will expire April 2013, will see the companies set up joint ventures to develop, manufacture and sell commercialized products. JAC has the capacity to produce new-energy cars with an annual capacity of about 10,000 units and aims for capacity of 100,000 new-energy vehicles by 2015.

Flip Business with Cisco

Foxconn Electronics (Hon Hai Precision Industry) and Chicony Electronics, which are the OEM partners for the Flip


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video camera, may see their orders affected if Cisco decides to discontinue the product line, according to sources from upstream component players. Cisco announced that the company will close down its Flip business and support its clients that are still using Flipshare software with a transitional plan, while some reports already stated that the company is laying off the 550 employees of Flip.

Cooperations

The Taiwan-based Foxconn Technology Group will donate 1 billion yuan to Tsinghua University in the next 10 years. It is a gift for the university's upcoming centennial anniversary and is aimed at promoting mutual cooperation in talent training, scientific research and other fields, said Terry Gou, chairman of Foxconn, at the university on April 12.

Lenovo

Conected TV

Digitimes reports that Lenovo is supposedly preparing a Smart TV line that they would sell through their PC retail channel. I assume Lenovo will focus on small screen type TVs and not compete with the established TV companies on the mid-size to large TV segments. The first Lenovo Smart TVs could arrive in the 2nd half of 2011.

Lenovo’s stock performance

CE Market

LCD TV

Monthly production by the 17 top LCD TV brands grew 15 percent from February to March, and is forecasting to grow 6 percent in April, according to the firm. In Q1’11, the leading 17 LCD TV brands planned to produce 41.1 million LCD TVs, and are targeting 44.8 million units for Q2’10, up 9 percent, according to the firm. LG Electronics, as well as Chinese set makers like TCL, Hisense, Skyworth and Changhong, are aiming for double-digit growth. Japanese brands, including Sharp, Panasonic, Sony, and Toshiba, ''are planning for lower growth or reduced production due to the earthquake in Japan and the uncertain economic situation,'' according to the firm.

''Samsung’s LCD TV production has been steady at 3 million per month for the first six months, with the exception of 3.3 million units in March. Sony plans to maintain its production levels at 1.9 million units from March to June, while LG Electronics plans to raise production from 2.3 million units in February to 2.6 million units in June,'' according to the firm. In general, China TV makers’ production will peak in April. However, in preparation for the coming May Labor Day shopping season, Chinese brands, especially Changhong, Hisense, Skyworth and TCL, are raising their production volumes in March, April and May. LCD TV panel makers are increasing shipments to the China market. “Supply chain inventory is at a healthy level due to aggressive price cuts since Q4’10, and new LCD TV models are in the pipeline and on the way to retail shelves,” noted Deborah Yang, an analyst at DisplaySearch, in a report. “Our research indicates that LCD TV brands tend to err on the cautious side, prioritizing inventory control and adjusting production plans as needed,


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in case sell-through in main markets is not as good as expected.”

Connected TV

Internet services have become essential to TV products. Overall, nearly 20 percent of all TVs shipped in 2010 featured connected TV capabilities. At a 30 percent compound annual growth rate, the connected TV category is forecast to grow to over 123 million shipments in 2014. This is according to a report of DisplaySearch in the Q1 2011 entitled "Quarterly TV Design and Features Report." Emerging markets will also play a major role in this growth, with Eastern Europe forecast to grow from 2.5 million connected TVs shipped in 2010 to over 10 million in 2014. In addition, DisplaySearch findings indicate that 33 percent of flat panel TVs sold in China in 2013 will have internet capability.

LED Market

The LED market size climbed 58% to US$15.8 billion in 2010 from US$10 billion. The market size of LED for LCD TV backlight actually boomed to approximately US$3.9 billion from US$960 million driven by the explosion of LED-TV. The market share of LED-backlit LCD TV arrived at 26.9% in 2010, and it is predicted to see 55.9% in 2011. Promisingly, LED will completely replace CCFL in 2014. The market share of LED-backlit NB rose to 95% in 2010 from the merely 59% in 2009; while that of LED-backlit LCD hit 15% in 2010 from 1.5% in 2009, and is projected to rest on 40% in 2012.

Demand for LEDs continues to rise, with TV applications forecast to dominate LED demand through 2013, accounting for nearly 50% of total LED backlight market demand. According to the DisplaySearch Quarterly LED Supply/Demand Market Forecast Report, LED lighting will capture the lead by 2014, as demand for LEDs in

LCD TV backlights falls. This drop is expected due to a decrease in the number of LED packages per set, a result of efficacy enhancements and cost reductions. Currently, LED backlights are used in all small/medium LCDs, and LED penetration in mobile PCs is nearly 100%. Penetration of LEDs in LCD monitors and LCD TVs continues to grow, while the number of LED packages per set is decreasing. After more than doubling to 12.9 in 2010, the average number of chips per set is increasing more slowly, and is expected to peak at 15.1 in 2012. This is driven by the increasing efficacy of LEDs, even as the cost per chip decreases. This virtuous cycle drives LED penetration higher in LCD backlights, as well as illumination.

Tablet PC

Global shipments of tablets—a segment consisting of media tablets like Apple Inc.’s iPad as well as PC-type tablets—are set to rise to 242.3 million units in 2015, up by a factor of more than 12 from 2010, new IHS iSuppli research indicates.Media tablet shipments will grow to more than 202 million units in 2015, up from 17.4 million in 2010. Shipments of PC-type tablets—i.e., tablets that have full PC functionality implemented via PC operating systems—will climb to 39.3 million units in 2015, up from 2.3 million in 2010. Total shipments of tablets will amount to 242.3 million units in 2015, up from the newly finalized IHS iSuppli estimate of 19.7 million in 2010.

The electronics maker will probably ship 39.7 million iPad tablet computers this year, according to iSuppli, which made an estimate of 43.7 million in February. A shortfall in iPad 2 production during the first three months of 2011 prompted the cut, the research company said Friday.


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Notebook

Top-10 notebook brand vendors worldwide saw their notebook shipments in the first quarter of 2011 drop sequentially with the only exception being Korea-based Samsung Electronics, which still achieved 1% growth on quarter, according to sources from upstream suppliers citing figures from research firm. The largest notebook vendor Hewlett-Packard (HP) shipped about 8.8 million notebooks in the first quarter with a sequential drop of 20%, while Acer, at the second, shipped 7.09 million units, dropping 13% sequentially; Dell, 5.82 million units, dropping 6%; Toshiba, 4.76 million units, dropping 10% and Lenovo, 4.74 million units, dropping 10%. The vendors' ranking was the same as the previous quarter. As for number 6-10, Asustek Computer shipped 4.16 million units with a sequential drop of 10%; Samsung shipped 3.11 million units with a sequential growth of 1%; Apple 2.74 million units with a sequential drop of 6%; Sony shipped 1.83 million units with sequential drop of 29% and Fujitsu shipped 713,000 units with sequential drop of 14%. The significant drop of HP's notebook shipments in the first quarter correspond to the company's previous statements that the market demand for consumer notebooks was lower than expected in the quarter, while Acer's drop in shipments was mainly due to its inventory pileup in the retail channel. Dell, benefiting by its low consumer notebook proportion business structure, only had a drop of a single-digit percentage in the first quarter, while Lenovo, Toshiba and Asustek all had a drop of around 10%, an average performance. Samsung and Apple were both originally expected to see sequential shipment growth in the first quarter; but due to Apple's MacBook shipments dropping off at the end of the first quarter, the company still achieve sequential drop in the quarter.

Mobile Phones

Global Handset Sales to Rise by 20.8% YoY to 382.9 Million Units in 1Q.2011 with Nokia, Samsung, and LG Losing Market Share to Apple, RIM, and ZTE According to New Research Report by IE Market

SmartPhones

ABI Research estimates that 100 million smartphones were shipped in Q1 2011. That represents a 0.5% reduction over Q4 2010 shipments and a 75% gain over Q1 2010. In comparison the overall handset market is estimated to be 380 million devices, or a 2.5% reduction from Q4 2010 levels. “Considering the recent trends, iOS could displace Symbian from its new second position by the end of 2011.” “Although seasonality is often cited as the cause of the shrinkage, Nokia’s 15% sequential decline acted as a drag on Q1’s anemic market growth,” says senior analyst Michael Morgan. Nokia’s smartphone market share dropped to 25% in the first quarter, down from 40% in the first quarter of 2010. While Nokia remains positive about its strategic shift to the Windows Phone 7 platform, ABI Research believes its losses will accelerate through 2011. Apple has benefited from an extra 2.2 million Verizon iPhones and strong performance during the Asia-Pacific holiday season with a 15% sequential gain in shipments. Samsung smartphones also performed well in Q1 showing 16% sequential gain, which lifted it to 13% of total smartphone shipments. The increased shipments from Samsung and Apple roughly equaled the drop in shipments from Nokia. HTC delivered solid 7% percent growth and 9.5 million smartphones, while RIM remained essentially flat with 2% sequential growth, and Motorola Mobility shipments experienced a 16% decline. Practice director Kevin Burden observes, “ABI Research believes the factors that muted growth in Q1 are


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expected to continue through Q2 of 2011 and overall smartphone market growth is not expected to achieve 2010 levels until the second half of the year.” The Android platform was installed in more than 30 million shipped smartphones in Q1, to take first place away from historic platform leader Symbian which was delivered in 25.6 million smartphones over the same period. Apple’s strong growth over the quarter moved iOS from 16% market share to almost 19% and a solid third place. According to VP of forecasting Jake Saunders, “Considering the recent trends, iOS could displace Symbian from its new second position by the end of 2011.”

China LCD TV Market

China's LCD TV market is expected to grow to 45 million units this year and to 57.8 million by 2014, according to research firm DisplaySearch. Its 3D TV market is estimated to grow to 2.3 million units in 2010 and to 13.9 million by 2014.

CE Emerging Market

The advanced emerging market countries contributed $13,393.7 million to the global consumer electronics industry in 2005, with a compound annual growth rate (CAGR) of 5.5% between 2005 and 2009 bringing this contribution to $16,575.6million. These countries are expected to reach a value of $20,205.3 million in 2014, with a CAGR of 4% over the 2009–14 period. Brazil holds the major share of the consumer electronics industry. In 2009, it accounted for 40.9% of the market. Among the advanced emerging market nations, Brazil is the leading country in the consumer electronics industry, with market revenues of $6,774.9 million in 2009. South Africa exhibited the highest growth in the consumer electronics market, with a CAGR of

11.9% between 2005 and 2009, while Hungary displayed the slowest growth (2.7%) over the same period. Brazil is expected to lead the consumer electronics industry in the advance emerging market nations, with a value of $8,001.3 million in 2014.

Digital Camera

The global digital still camera (DSC) market began to recover in 2010 after a significant downturn in 2009 caused by worldwide economic conditions and the increased strength of the Japanese Yen. DSC unit sales are expected to rise faster between 2011 and 2012, and then continue a steady growth rate over the forecast period, fueling worldwide revenue to approximately $43.5 billion by 2015, says In-Stat.

Mobile TV

In the run-up to NAB, where a number of vendors and device manufacturers will be demonstrating a wide array of devices and technologies for the delivery of mobile digital TV signals, the Open Mobile Video Coalition is estimating that mobile DTV signals will be available in about two thirds of all American homes within the next 12 month. "OMVC continues to track the progress made by broadcasters who are turning on Mobile DTV," noted Anne Schelle, executive director of OMVC, a coalition of America's broadcasters working on the technology in a statement. "The number of broadcasters on-the-air with mobile continues to rise, with 76 stations now on-the-air in 32 markets.... Between those stations already on-air and those who are coming soon, we project that Mobile DTV will reach more than 71 million households - or more than two-thirds of all viewers in America - in the next twelve months."


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OLED

The two most significant OLED applications are their use as displays and sub-displays and lighting; which form the foundation for a wide spectrum of applications in a variety of industries; including energy, consumer electronics, information technology, and industrial automation. Lighting is an application segment with a high growth potential. The market is expected to reach $3051.2 million in 2015, at a CAGR of 27.8% from 2010 to 2015.

Bluray Players

Blu-ray disc player sales in Taiwan may surpass 100,000 units in 2011 as players such as Toshiba, Sony, LG, Panasonic and Sharp all launched models with prices less than US$100 in the first quarter and their strategies are expected to turn Blu-ray disc player's market status from niche to fierce competition, according to sources from Blu-ray disc player vendors. Affected by online video and cloud computing, Taiwan's multimedia players' sales in 2010 were lower than those in 2008 and 2009 and only reached 630,000 units, of which, the sales volume of Blu-ray disc players was only about 30,000 units, accounting for less than 5% of the total volume due to high prices.

Personal Navigation Devices

The International Data Corp. (IDC) China Quarterly Personal Portable Navigation Devices (PND) Tracker shows that personal PND shipments in China reached 2.4 million in 2010. The leading global IT consulting firm predicts that China's total personal PND shipments will reach 7.8 million by 2015, representing a compound annual growth rate (CAGR) of 26.6 percent over five years.

Medical Imaging

TriMarkPublications.com cites in its newly published "Medical Imaging Markets" report that global spending on medical imaging equipment exceeded $21 billion in 2010.


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Panel Industry

Samsung

Production in China

Samsung Electronics reportedly has said it may start construction of its 7.5G panel plant in China as early as in May 2011 with mass production of panels likely to begin in early 2013. If the plan materializes, Samsung will be the first foreign firm to kick off construction of next-generation panel lines in China.

Samsung Electronics Co says it will invest 541 billion won ($465.5 million) to set up a $US3 billion flat-screen production joint venture in China, as it targets the fast-growing consumer electronics market. The world's largest maker of liquid crystal display (LCD) screens received Chinese approval for the plant construction in December along with LG Display, which is planning a separate $US4 billion eighth-generation plant in Guangzhou, Guangdong province. Samsung plans to maintain a 60 per cent stake in the project in Suzhou, Jiangsu province, with Suzhou Industrial Park keeping 30 per cent and Chinese TV maker TCL Corp holding the remaining 10 per cent. Samsung initially planned to take an 80 per cent stake in the project but decided to raise its partners' shares to bolster their strategic tie-up, it said in a filing to the Korea Exchange. The South Korean company, which is in an intense competition with rival LG Electronics Inc and LG Display over 3D technology to take initiative in the burgeoning 3D TV market, also said it was considering a separate $US230 million investment to buy a 15 per cent stake in Chinese flat-screen panel firm CSOT, partly owned by TCL.

LG Display

Business

LG Display Co., the world’s second- largest maker of flat screens, rose the most in more than two years after reporting a loss that was smaller than analysts’ estimates and forecasting a profit this quarter. The company had a net loss of 115.4 billion won ($106 million) in the three months ended in March, LG said yesterday. That compared with an average estimate for a loss of 208.4 billion won in a Bloomberg survey of 12 analysts before the announcement. Sales fell 8.7 percent to 5.37 trillion won. LG Display may post a profit of 149 billion won in the current quarter and boost that to 549 billion won in the third quarter, according to the average of 18 analysts’ estimates compiled by Bloomberg.

LG Display’s stock performance

Production in China

Another Korea-based panel maker, LG Display, is expected to follow suit to begin construction of its planned 8.5G panel plant in China soon, sources at Taiwan-based flat panel makers asserted. The Korea makers, who had beat their rivals in Taiwan, mainly AU Optronics (AUO) and Chimei Innolux (CMI), to secure licenses to set up next-generation panel plants in China, will further strengthen their lead in the


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race to ramp up supply capability among all foreign flat panel makers in China.

Sharp

LCD Production

Japan's Sharp Corp. is reducing its LCD production output ''due to the delay of component procurement following the March 11 earthquake,'' according to Dow Jones. In response, LCD glass maker Corning Inc. said he company plans to maintain production levels at its Shizuoka and Sakai City LCD glass facilities during Sharp's temporary production curtailment of LCD panels.

Sharp Corp has suspended production at two Japanese liquid crystal display (LCD) panel plants until early May as it confronts slumping domestic demand for televisions and shortages of a gas used in panel production, the company said on Monday.

Change management

Sharp Corp said Wednesday it will increase the proportion of foreigners among its domestic new hires to 10% in fiscal 2012 to enhance its overseas operations. To date, the figure has remained under 10 percent. In fiscal 2012, starting in April next year, it plans to recruit 250 graduates of universities, graduate schools and technical schools, down from 330 for the just-started fiscal year. Separately from its domestic recruitment plan, Sharp intends to recruit 400 people overseas in fiscal 2012, placing emphasis on hiring people in China and other emerging economies.

Smartphone Panel

Sharp Corp., Japan’s largest maker of liquid-crystal displays, will start making smaller screens at a television-panel plant to meet demand for mobile devices. Sharp will produce small- and

medium-sized displays using oxide semiconductors at its No. 2 plant in Kameyama city, central Japan, by the end of the year, the Osaka-based company said in a statement today. The factory will continue to produce TV panels, according to the statement.

Sharp will make next-generation, low-temperature poly-silicon displays for the iPhone 6, according to a report. According to Japanese newspaper Nikkan, the company is to make the displays for the handset, which is anticipated in 2012, and will be smaller and lighter than previous versions.

Production in China

Japan-based Sharp, after its application to set up an 8G flat panel plant in China was rejected, has tied up with CEC Panda aiming to set up a 10G panel plant in China. Industry sources in Taiwan expect the Sharp-CEC Panda team will start construction of the 10G plant in June at the earliest.

Sony

LCD Panel

Sony Corp has backed off on plans to boost its stake in its joint LCD production venture with Sharp Corp for now, the Nikkei business daily reported, citing company sources. The electronics giant intended to raise its interest in Sharp Display Products Corp from 7 percent to as high as 34 percent by April-end, the daily reported. Supply is outpacing television demand with South Korean and Taiwanese producers investing heavily in LCD panels, the Nikkei said.

Sharp Corporation ("Sharp") and Sony Corporation ("Sony") today announced that they have entered into an amendment to their agreement (the "JV Agreement") executed in July 2009 to establish Sharp Display Products Corporation ("SDP"), a joint venture, to produce and sell large-sized LCD panels and modules. Under the original JV


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Agreement, Sony was to make additional capital injections to SDP, resulting in a maximum 34% ownership by Sony of SDP by the end of April 2011, subject to certain conditions set forth in the JV Agreement. Sharp and Sony have now agreed to amend the JV Agreement to suspend those contributions and plan to continue to discuss any future contributions by Sony to SDP until the end of March 2012. On July 1, 2009, Sharp transferred its LCD panel plant in Sakai City, Osaka Prefecture, to SDP. On December 29, 2009, Sony invested 10 billion yen into SDP in exchange for new shares issued by SDP to Sony (at which time Sony owned 7.04% of the shares in SDP) and, as a result, SDP became a joint venture company of Sharp and Sony on that date. Sony has made no further investment to date.

S-LCD, a flat screen joint venture between Sony Corp and Samsung Electronics, said it would reduce capital by $555 million, as Sony struggles with perennial losses from its TV business and Samsung seeks to shift to a new type of display.

AUO

Business

AU Optronics Corp. ("AUO" or the "Company") (TAIEX: 2409; NYSE: AUO) today announced its preliminary consolidated March 2011 revenue of NT$35,947 million, up by 32.7% month-over-month and down by 11.6% year-over-year. Owing to the lower-than-expected TV panel prices, AUO's unaudited consolidated revenues for the first quarter of 2011 totaled NT$93,230 million, down by 9.1% quarter-over-quarter and 16.4% year-over-year. For March 2011, Large-sized panel (a) shipments, with applications on desktop monitor, notebook PC, LCD TV and other applications, surpassed 10.71 million units, an increase of 30.1% from the previous month. As for small-and-medium-sized panels, the

shipments were around 16.77 million units, up by 37.2% month-over-month. In the first quarter of 2011, large-sized panel shipments exceeded 28.40 million units, an increase of 1.3% from last quarter and an increase of 4.3% over last year. On the other hand, shipments of small-and-medium-sized panels for the same quarter totaled 43.49 million units, down by 17.8% quarter-over-quarter and 23.7% year-over-year.

AUO’s stock performance

Patent Agreement

Taiwanese flat panel maker AU Optronics Corp. said Friday it had signed a patent agreement with Japanese rival Sharp to dismiss ongoing lawsuits the two firms have filed against each other.

AU Optronics Corp. ("AUO") (TAIEX: 2409; NYSE: AUO) and Japan's Sharp Corporation ("Sharp") signed a patent cross license agreement today. Both parties have agreed to license to the other specified patents owned by each party. Both AUO and Sharp have made significant investments in the research and development of advanced display technologies and each has built a strong and extensive patent portfolio in the field of TFT-LCD. Both parties have agreed to license certain of their patents to the other on the basis of mutual respect for each other's intellectual property rights. The cross license will allow each company to innovate using the other company's specified patented technologies for the


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further advancement of TFT-LCD technologies.

Utilization Rates

Since leading international vendors of LCD TVs have lowered their 2011 target shipments set at the end of 2010 mainly because sales performance in the first quarter has fallen short of original expectation, Taiwan-based AU Optronics (AUO) and Chimei Innolux (CMI) may see utilization of their LCD TV panel production capacities drop from 80-85% in the first quarter of 2011 to 75-80% in the second quarter, according to industry sources in Taiwan.

3D Display Panel

AU Optronics (AUO) will begin volume production of dead-zone free 3D display panels in the third quarter of 2011, with some 15.6-inch notebook models built with the new 3D panels to hit the market in the quarter, according to the company. AUO's dead-zone free 3D panels incorporate switchable lens technology and face-tracking to overcome the dead-zone problem when viewing the 3D display using the naked eye, the company said in a technology seminar. By 2013, shipments of 3D TVs will account for 30% of the global LCD TV shipments, and combined shipments of 3D notebooks, tablet PCs and LCD monitors will account for 10% of the global PC market, AUO estimated.

Production in China

Although AUO has landed permission to team up with China-based InfoVision Optoelectronics (IVO) to set up a panel plant in China, AUO has not yet decided whether it will be a 7.5G or 8.5G plant, the sources pointed. CMI has not yet received permission to either cooperate with local companies or set up a new plant of its own in China.

Solar Energy

In the wake of Japan's March 11 massive earthquake, M.Setek, a subsidiary of AU Optronics (AUO), has closed down its solar-grade polysilicon plants in Sendai and Souma, due to disrupted water and power suppliy, without a definite schedule for resuming production in sight. AUO reportedly is actively seeking the establishment of a polysilicon plant in Taiwan, possibly in a coastal industrial zone in Changhwa. M.Setek's technological team may be stationed at the projected plant.

CMI

Capital Expansion

LCD panel maker Chimei Innolux (CMI) plans to launch a capital expansion project through a rights issue and the issuance of global depositary receipts (GDRs), with the number of new shares issued for the expansion project set to no more than one billion. With a closing price of NT$32.20 recorded by CMI's shares on the Taiwan Stock Exchange (TSE) on April 13, CMI could raise up to NT$32.2 billion (US$1.11 billion). CMI said it plans to use the newly raised capital for factory expansion, new equipment purchases, investment and strengthening its financial structure. The capital expansion project is still subject to approval from shareholders. The company is scheduled to hold a shareholders meeting on June 28. CMI has recently stepped up its marketing of 3D TV panels in the China market, aiming to ship three million units of such panels in the market in 2011.

3D

Australia-based Dynamic Digital Depth (DDD) Group, which licenses 3D technology for use in PCs and consumer electronics, has signed with LCD panel maker Chimei Innolux (CMI) for bundling its TriDef 3D PC software


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products with CMI's new lines of panels used in monitors and notebooks, according to DDD. TriDef 3D PC software products support more than 450 PC-based games in 37 languages and are able to convert 2D content to 3D content, DDD indicated. CMI said it is actively tapping the China market through cooperation with local vendors of 3D LCD TVs, aiming to ship three million 3D TV panels to the market in 2011. CMI also predicts that the 3D penetration of LCD TVs in the China market will exceed 50% in 2013.

Green LCD TV

Chimei Innolux (CMI) and its affiliated own-brand LCD TV vendor will soon jointly offer a 42-inch LCD TV featuring compliance with requirements for carbon neutrality, according to CMI. The offering is in line with the Environmental Protection Administration's promotion of carbon neutrality and carbon management plans for industrial products, CMI indicated. The model is the world's first of its kind, CMI claimed.

Tablet PC

TFT-LCD panel maker Chimei Innolux (CMI) is making efforts to hike yield rates for its production of IPS (in-plane switching) panels to a level required for use in the iPad, and hopes to obtain certification from Apple and then begin shipments in May 2011, according to industry sources. In response, CMI declined to comment.

CPT

Business

Taiwan-based TFT-LCD panel maker Chunghwa Picture Tubes (CPT) on April 28 released its unaudited financial report for the first quarter of 2011, posting a net loss of NT$2.33 billion (US$78.2 million). CPT shipped 5.256 million large-sized TFT-LCD panels and 98.135 million medium- to small-sized

panels during the first quarter of 2011, representing a sequential rise of 2.4% and drop of 7.9%, respectively and worth NT$15.55 billion in total. In addition, CPT shipped 1.122 million touch products in the first quarter. CPT expects its shipment volume of large-sized panels in the second quarter of 2011 will grow on quarter and the corresponding average selling price will rise as well. CPT plans to increase output of panels used in e-book readers and touch products to improve its operating profitability. CPT posted consolidated revenues of NT$16.67 billion, gross margins of -9.3%, a net operating loss of NT$3.53 billion and a net loss per share of NT$0.358 for the first quarter of 2011.

BOE

Business

China-based TFT-LCD panel maker BOE Technology posted net losses of about CNY700 million (US$106 million) for the first quarter of 2011, China-based tech.sina.com cited the company as indicating. BOE also released its 2010 financial report, recording revenues of CNY8.03 billion which grew by 28.4% from 2009 and net loss of CNY2.0 billion, the report noted. With volume production kicking off in mid-November 2010, BOE's 6G factory in Hefei, northern China, has reached a yield rate of 95% and capacity is expected to be fully utilized in the second quarter of 2011, the report said. BOE is installing equipment at its 8.5G factory in Beijing, with trial production scheduled for June and volume production to begin in the third quarter of 2011, the report indicated.

Production in China

Although the two 8.5G plants being built by China-based BOE Technology and China Star Optoelectronics Technology (CSOT) are both expected to commence official operations in the


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second half of 2011, the two 8.5G plants are unlikely to ramp up their output substantially until the end of 2012 or in early 2013 due to a lack of experience in volume production and sufficient technology capability, said the sources.

Flat Panel Market

Panel Business

Latest data collected by Digitimes Research show that Taiwan makers' large-size LCD panel shipments (9-inch and larger models and including those for tablet PCs) decreased 1.4% sequentially to 65.15 million units in the first quarter of 2011. In comparison, global shipments of large-size flat panels were down 5% to 160.72 million units during the same period with shipments from Taiwan makers accounting for a 40.5% share. With sales of LCD TVs from international major players falling short of their targets and China-based TV vendors recording flat performance during the first quarter, Taiwan's LCD panel makers saw their first-quarter shipments of TV panels decline 4.8% sequentially. With regard to shipments of IT panels, including those for monitor, notebook and tablet PC applications, the performance of Taiwan-based makers was better than industry average. Among Taiwan's makers, Chunghwa Picture Tubes (CPT) posted the highest 3.3% sequential growth rate in shipments of large-size LCD panels in the first quarter, while AU Optronics (AUO) saw its large-size panel shipments edge up 1.4% on quarter, buoyed by increased shipments for IT applications. Although LG Display saw its large-size LCD panel shipments drop 15% sequentially in the first quarter, shipments of table PC panels by Taiwan-based makers still lagged far behind those shipped by LG Display, the Digitimes Research data show.

LCD TV panel supply will be tight in second-quarter 2011 because of unstable supply of some of the components. Digitimes Research predicts that Taiwan-based makers will ship 10.93 million LCD TVs in the second quarter, up 6.3% sequentially and 39.2% on year. Taiwan makers' total LCD TV shipments will reach 54.88 million units in 2011, accounting for 26% of the global total.

Panel Prices

Prices of TV panels are expected to stage an uptick in June although the extent of the hikes could be limited, according to industry sources. As makers have been keeping their capacity utilization rates at low levels and TV panel prices have reached cash-cost levels, there is room for price increases. The price hikes have been expected since flat panel makers managed to raise their quotes, though marginally, for IT panels in the fourth quarter 2010, the sources indicated. Panel makers in Taiwan and Korea have been running at 70-80% of their capacities for a period, leaving low inventory levels at the makers as well as in the channels, added the sources. In addition to price hikes, Taiwan-based panel makers may also be able to receive windfall orders from, or sign technology cooperation agreements with, panel vendors in Japan such as Sony and Sharp, who are likely to release their orders or technologies in order to secure sufficient supplies of key components after the March 11 earthquake, the sources asserted. The increasing shipments of flat panels for tablet PC applications and the development of 3D panels will also be the new growth drivers for Taiwan's makers, said the sources.

LCD Panel cooperations (China & Taiwan)

A trade mission of LCD TV vendors in China will visit Taiwan in June with plans to purchase up to 30 million flat


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panels from local makers, worth US$5.5 billion, up 28% in volume and 34% in value as compared to purchases made by a similar mission in 2010. Both of the increased rates will be higher than the growth rate of the LCD TV retail market in China in 2011. Sales of LCD TVs in the China market grew 21% to 39 million units in 2010 and are expected to increase 18% to 46 million in 2011, according to industry sources. Currently, over 90% of flat panels used by China-based TV makers are purchased from the world's top-four flat panel vendors – Samsung Electronics, LG Display, Chimei Innolux (CMI) and AU Optronics, with CMI taking up a 32% share. Taiwan-based flat panel makers as a whole accounted for over 50% of TV panels consumed by TV makers in China in 2010 and the ratio is expected to further increase in 2011, the sources noted.

Technology providers

Samsung

Semiconductors

Samsung is getting closer to giving Intel a run for its money in the semiconductor market. That's according to IHS iSuppli, which has said that in 2010, Samsung got nearer to Intel's chip leadership than any other company has within the last 10 years. Samsung got close to challenging Intel thanks to its 9.2 percent global chip revenue last year, a rise from the 7.6 percent recorded in 2009. As a result of its growth it was only 4.1 percent behind Intel. As a result of the growth, Samsung gained a 59.1 percent rise in semiconductor revenue during 2010. This gave it a huge edge and meant it "massively outperformed the overall semiconductor industry".

Samsung SDI’s stock performance

Rechargeable Batteries & Electric Cars

Samsung SDI Co Ltd , the world's No.1 maker of rechargeable batteries, forecast on Wednesday the global lithium-ion battery market would triple by 2015, helping its shares rise nearly 6 percent to a record high. Rechargeable


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battery makers, led by Samsung, LG Chem and Sanyo Electric , are betting on strong growth thanks to rising demand from makers of electric cars, smartphones, tablets and other consumer electronics products. Samsung SDI, which counts Apple Inc and Samsung Electronics Co among its major battery clients, predicted the global lithium-ion battery market would swell to $32 billion in 2015 from $11 billion last year.

Samsung SDI also estimated electric vehicles would account for 7 percent of the global automobile market by 2015, rising to 17 percent by 2020.

Toshiba

NAND Flash

Toshiba has disclosed it is now capable of producing NAND flash chips using 19nm process technology. The claim was made following Intel and Micron Technology's joint announcement recently that the pair has developed a 20nm process technology for manufacturing NAND chips. Toshiba announced it has fabricated NAND flash chips on 19nm process technology, the finest level yet achieved. This latest technology advance has already been applied to 2-bit-per-cell 64Gb chips enabling 8GB on a single chip.

Texas Instruments

Acquisition

Texas Instruments Inc (TXN.N) is buying National Semiconductor Corp (NSM.N) for $6.5 billion, paying a rich 78 percent premium to merge two of the industry's oldest firms into a dominant force in analog microchips used in products ranging from phones to cars.

TI’s stock performance

Broadcom

Business

Chip maker Broadcom Corp. on Tuesday reported first quarter results that beat Wall Street's estimates. But the stock slipped after hours on a second-quarter revenue outlook that is below analysts' current projections. Broadcom reported net income of $228 million, or 40 cents per share, on $1.82 billion in revenue for the three months ended March 31. That compares with net income of $210 million, or 40 cents per share, on $1.46 billion in revenue in the first quarter of last year.

Broadcom’s stock performance

Acquisition

Irvine chipmaker Broadcom Corp. could be in the running to acquire NXP Semiconductors NV of the Netherlands, according to a report in a Dutch newspaper. Broadcom is said to be looking at NXP along with Intel Corp. and Qualcomm Inc., according to the report in De Telegraaf, which cited an undisclosed banker as its source. After


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the report Friday, NXP's chief executive came out and said his company isn't looking to sell but would consider a rich offer like Texas Instruments Inc. made for National Semiconductor Corp. on Monday.

Green Product

Broadcom Corporation (Nasdaq:BRCM - News), a global innovation leader in semiconductors for wired and wireless communications, today announced that it has joined GreenTouch™, a global industry consortium dedicated to dramatically improving the energy efficiency of Information and Communications Technology (ICT) networks.

Infineon

Production in Malaysia

Infineon Technologies has announced it will invest $160 million this year to expand its production capacity, research & development and to upgrade its manufacturing facilities in Malacca, Malaysia. The investment will mainly increase the capacity to produce power semiconductors for energy efficiency applications and will add 350 jobs in Malacca in 2011. Today, Infineon employs nearly 7,000 employees in Malacca.

Infineon’s stock performance

Mediatek

Restructure

MediaTek is planning to initiate a shake-up of its corporate structure as the company strives to achieve better individual specialization and further increase its operational efficiency, according to sources familiar with the matter. The move is also to support its integration with Ralink Technology. MediaTek will reorganize the company into eight major divisions to target different market segments – TV, PC, optical storage, feature phone, smartphone, Wi-Fi/Bluetooth and WiMAX/LTE, and Ralink's product lines – instead of the current two business groups, the source noted.

Mediatek’s stock performance

Nvidia

ARM

Nvidia is expected to include Samsung Electronics in the client list for its Tegra 2 processors soon after the graphics chipset giant managed to win orders from Motorola and LG Electronics (LGE) for the production of Atrix 4G and LG Optimus 2X smartphones. In addition to Samsung, Nvidia is set to announce its fourth smartphone partner in the near future and Nvidia is already co-developing devices with the currently-unknown partner.


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Nvidia’s stock performance

Mstar

Business

MStar Semiconductor is likely to post an EPS higher than that of fellow company MediaTek for the first quarter of 2011, according to industry sources. MStar's earnings for the fourth quarter of 2010 translated into a net EPS of NT$3.50 (US$0.12), while MediaTek registered NT$3.52. MediaTek's quarterly EPS has slid since the first quarter of 2010, when it registered NT$10.29. MediaTek's gross margin is expected to drop to 45-47% in the first quarter from 49.2% in fourth-quarter 2010, judging from the company's revenue performance, the sources said. MStar, however, may be able to meet its target of flat to slight growth, the sources indicated. MediaTek saw revenues decrease 12.4% on quarter to NT$19.86 billion in the first quarter. MStar, however, had a 0.1% increase sequentially during the same period. MStar previously estimated that first-quarter revenues would grow 0-6% sequential in the first quarter with a 41-43% gross margin. The company reported NT$8.2 billion in revenues for the fourth quarter of 2010, with a gross margin of 41.2%. Price competition from China-based rivals in the 2.5G segment may continue to negatively affect MediaTek's profitability in the second quarter, the sources said. Though MediaTek's revenues will likely enjoy double-digit revenue growth

sequentially in the second quarter, gross margin may only see flat growth, the sources estimated.

MStar’s stock performance

Intel

Tablet PC

Lenovo, Fujitsu and Samsung Electronics will showcase a number of tablet PCs built on Intel's Oak Trail platform at the Computex Taipei trade fair in June, while Micro-Star International (MSI) will start marketing its latest tablet PCs built using AMD's Brazos APUs, according to industry sources.

Intel’s stock performance

Storage Technology – Flash

Intel and Micron have developed a 20nm process technology for Nand Flash storage. In January, IBM and Samsung announced a research


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scheme where the two companies would collaborate on semiconductor materials and manufacturing processes to 20nm and beyond. In April, Toshiba announced that it had developed a 24nm process for manufacturing Nand Flash with an embedded control ship to perform error correction code functions.

Intel has officially cut the ribbon on a $3 billion NAND flash plant in Singapore along with partner Micron. The two had been forced to push back the schedule for opening the fab in 2010 due to the global financial crisis, but have now begun to ramp up the 25 nanometre process facility a month ahead of the re-planned timing.

OS – Google

Intel is working with Google to bring Android 3.0 to tablets running on low-power Atom chips code-named Oak Trail, according to an Intel executive. The OS, which is code-named Honeycomb, can run on Oak Trail chips. Release of actual products will depend on the device makers, said Bill Kircos, general manager of marketing at Intel's netbook and tablet group. About 35 tablets are expected to become available with Oak Trail chips starting in May from companies like Lenovo, Fujitsu, Samsung and Motion Computing, Kircos said. Oak Trail tablets are expected to be shown at the Intel Developer Forum show in Beijing this week.

Intel is establishing a joint innovation center with Tencent, one of China's largest Internet firms, to develop products and services around the chip maker's MeeGo mobile operating system and devices using its Atom processors.

ARM

Business

ARM Holdings on Wednesday posted better than expected Q1 results. For the quarter, the U.K.-based semiconductor technology licensing company reported revenue of $185 million, up 29% from a year ago, and above the Street at $173.8 million. Profits of 13 cents a share beat the Street by two cents. The company continues to benefit from the rapid growth in the smart phone market, where processors that use ARM technology dominate the market. ARM President and co-founder Tudor Brown said in an interview with Forbes this morning that ARM-based processors are found in 95% of all mobile phones.

ARM’s stock performance

Smartphones & Tablet PC

Smartphones and tablets will be the first devices to use ARM's upcoming Cortex-A15 processor, and will be available starting late 2012 or early 2013, an ARM executive said this week. ARM's partners will initially use dual-core processors, and later on quad-core parts, in mobile devices, said James Bruce, the U.S. mobile segment manager at ARM Holdings. ARM processors go into most of the world's smartphones and tablets, and the company licenses its designs to chip makers such as Nvidia, Samsung, Texas Instruments and Qualcomm. Announced in September, the Cortex-


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A15 can run at speeds of up to 2.5GHz and stretch to 16 cores in certain configurations.

AMD

Tablet PC – Android

It was only a matter of time before AMD followed Nvidia's lead and finally jumped onto the Android bandwagon, as the company is now recruiting engineers to create chipset drivers for Android. According to unnamed sources, the nation's second largest CPU manufacturer is now looking to offer notebook and tablet partners chipset solutions supporting Google's popular mobile platform. "The Linux Base Graphics team is looking for Android Driver Development engineers to help us evolve our driver stack for new platforms and in line with the development trends in the Android ecosystem," reads the job description. "Experience with video decode acceleration within the Android web browser or video player application would be an asset. Experience with webm and/or OpenMax would be a bonus."

AMD’s stock performance

JustAd.TV

Connected TV

justAd.TV, the non-linear advertising specialist, is opening a new chapter in targeted advertising, enabling content

owners to embrace and monetize the Connected TV environment with the launch of the worlds’ first multi-device TV advertising platform. The new software development kit (SDK) is compatible with the leading connected devices and designed to allow content and platform owners to immediately start generating new revenues from today’s multi-screen, connected TV world.

Technology Market

Semiconductor Industry

Overall worldwide semiconductor revenue amounted to $304.1 billion in 2010, up 32.1 percent from $230.2 billion in 2009.

Total worldwide semiconductor revenue reached $299.4 billion in 2010, up $70.7 billion, or 30.9 percent from 2009, the largest dollar increase for the semiconductor industry in any one year, according to Gartner.

System Integration

The global market for Systems Integration is projected to reach $339.68 billion by 2017, primarily driven by growing complexity of IT infrastructure, the need to integrate multiple application/system capabilities for integrated IT set-up, and increased corporate efforts directed at application consolidation, optimization and rationalization. Strong demand for Enterprise Application Software (EAS)


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systems also augurs well for the future of this market.

Silicon wafer

Korea- and Taiwan-based foundry houses and memory-IC manufacturers have obtained support from their local producers of blank silicon wafers as failure of supplies from Japan still persist, according to industry sources. Samsung Electronics and Hynix Semiconductor have both secured supplies of wafers made by LG Siltron. The Korea-based wafer maker has turned its attention to supporting domestic demand, the sources indicated. Meanwhile, Formosa Sumco Technology (FST) has moved to give priority support to its Taiwan-based clients including foundries Taiwan Semiconductor Manufacturing Company (TSMC), United Microelectronics Corporation (UMC) and Vanguard International Semiconductor (VIS), and memory chipmakers Macronix International, Nanya Technology and Inotera Memories, the sources said. Headquartered in Taiwan, FST is a silicon wafer joint venture of Sumco Techxiv and Formosa Plastics Group. Operations at Shin-Etsu Chemical's Shirakawa plant located in Fukushima Prefecture, Japan remain closed, according to a company statement issued on April 11. Shin-Etsu said it has started shipping the inventories produced before the earthquake on March 11.

CMOS

Japan's massive earthquake has affected the production and distribution of an important component in many cellphone cameras, the CMOS (complementary metal-oxide semiconductor) image sensor, from Sony and Toshiba.

Lithium ion batteries

Lithium ion batteries were first proposed in the 1970's and commercially developed in the 1990's. Since then, the market for lithium ion batteries has grown to $11 billion (2010) and is expected to reach $43 billion by 2020.


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Payment Industry

Verifone

Mobile Payment

VeriFone Systems Inc, the largest U.S. maker of payment terminals, expects to ship well over 1 million 'near-field communications' (NFC)-enabled systems this year, underlining growing momentum for a technology that allows shoppers to buy with little more than a wave of a smartphone. The number of mobile payment users is expected to top 340 million in 2014, ringing up $245 billion worth of transactions, according to research firm Gartner.

Google plans to install thousands of VeriFone products that will allow customers to make payments using cell phones and other devices at retail locations.

Verifone’s stock performance

Ingenico

Acquisition

VeriFone Systems, Inc., and Hypercom Corporation announced recently that they have reached an agreement to sell the U.S. payment systems business of Hypercom to Ingenico S.A. The transaction is expected to close immediately prior to completion of VeriFone's acquisition of Hypercom, which is expected to occur in the second half of 2011, subject to certain

closing conditions. The aggregate purchase price to be paid by Ingenico is $54M in cash, subject to certain post-completion price adjustments. In 2010, the Hypercom U.S. business included in the agreement achieved revenues of approximately $61M. Following the completion of the merger, VeriFone will retain Hypercom's non-payment terminal Networking products operations in the U.S. The sale is part of the contemplated divestiture previously announced by VeriFone in connection with its proposed acquisition of Hypercom. The agreement marks an important milestone in the path to the completion of Hypercom's merger transaction with VeriFone.

Ingenico and KICTeam announced today the signing of an OEM agreement for cleaning cards specifically designed for Ingenico POS terminals. Over the last few years Ingenico has tested and validated the effectiveness and efficiency of cleaning cards; in the end, Ingenico found that KICTeam's proprietary Waffletechnology® cleaning cards provide the most cost effective and safest solution available.

Ingenico’s stock performance

Hypercom

City Automation

Hypercom Corporation (NYSE:HYC - News) today announced that it has completed the full EMV certification of all of its Artema Modular self-service payment systems and Artema Compact


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countertop terminals across 49 Dubai Metro stations to speed ticketing for 4 million passengers per month. The EMV certification means that travelers on Dubai’s urban railway network will benefit from secure and convenient payment using their chip and PIN cards.

Hypercom’s stock performance

Energy Industry

IBM

Smart Energy & Building automation

Information technology (IT) giant, International Business Machines Corp. (IBM) announced that it has completed the acquisition of TRIRIGA, Inc. Las Vegas, Nevada-based TRIRIGA Inc. is a privately held company that provides real estate management software solutions. With the TRIRIGA acquisition, IBM will be better positioned to capitalize on the $250 billion smart building opportunity going forward, as predicted by The American Council for an Energy Efficient Economy.

IBM’s stock performance

Samsung

Renewable Energy

South Korea's largest business group Samsung signed an initial deal Wednesday to invest $7.04 billion in a state project to build a green energy complex on reclaimed wetland. Samsung signed a memorandum of understanding with the government to spend 7.6 trillion won ($7.04 billion) on the construction of eco-friendly production facilities from 2021, the prime minister's office said.


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Pattern Energy Group LP (Pattern) announced today that it has partnered with Samsung Renewable Energy to acquire wind power projects in Ontario from ACCIONA and Boralex. These projects will be combined with Pattern and Samsung's larger South Kent Wind Farm, which is under development. The 270 megawatt (MW) wind farm, located in the Regional Municipality of Chatham-Kent, is estimated to produce enough electricity each year to power more than 73,000 local homes.

Solar Market

Germany

Germany may increase its annual solar installation target to 5 gigawatts from the current 3.5 gigawatts, according to estimates at research firm IHS ISuppli. Japan’s accident may also lead to a review of Italy’s plan to cut incentives for solar-panel buyers from June, the researcher said.

Price reduction

Solar-panel prices will likely fall to $1.50 per watt in the second half of 2011 from about $1.80 in 2010, Jenny Chase, a solar analyst for Bloomberg New Energy Finance, said March 29.

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