Ching-siang has stepped down, he says, because of health problems. He has also quit his role as director on the board. But there is speculation that there may be more to the decision than Chimei is admitting.
Cash-strapped CMI has been attempting to drum up some funding. Digitimes‘ sources reckon it’s after $1.97 billion. However, CMI also has other substantial loans, and a lack of support from Foxconn Group – which owns 11 percent of CMI – is hampering attempts to get a loan together.
CMI has, like others in the panel industry, turned in poorer than expected financial results recently. This has led to calls for CMI to team up with domestic rival AU Optronics to survive any lurches into the red.
A similar situation has cropped up in Japan where Sony, Hitachi and Toshiba have teamed up with Japanese authorities to stay competitive.
Taiwanese authorities are angling for a collaboration between Chimei and AUO. Both recently met with government representatives, and there seemed to be a possibility a merger is around the corner.
DisplaySearch panel analyst Paul Gray told TechEye it’s likely there is some back-room string pulling to make sure Chimei can operate in the cut-throat environment of the LCD industry.
“The Taiwanese government has always been creative and proactive in ensuring that firms do not become sub-scale,” Gray said. “There is definitely a move afoot for the firms to merge.
“As Bruce Berkoff, the chairman of the LCD TV association has said in the past, ‘science always loses to engineering, engineering always loses to economics, economics always loses to politics’.”
Gray continues: “One effect of the departure could be that business will be more driven by Hon Hai and Foxconn, with Chimei Innolux moving from panel production to being a vertically integrated TV manufacturer like Samsung.”
Gray tells us there are widespread difficulties in turning a profit, and this will push a merger.
“Everybody is losing money, not just the Taiwanese panel makers,” Gray says. “It’s a pretty exceptional market where even the industry leader is losing money. There is a ferocious level of competition, and when companies are losing money then there is often consolidation.
“Consolidation has probably not finished in the industry yet, we could end up with just four main players eventually.”
Just how well the two could gel is murky.
“It’s a business where you get rewards to scale,” according to Gray, “though of course you have to ensure that the companies that are merging are a correct fit.
“It is not always an A plus B equation, with the companies a sum of their parts; the firms might not be compatible for a variety of reasons. For example, their culture, history or even down to technical detail might fit.”