A week in tech, July 2-8

A roundup of the latest technology news.

Pioneer Corp, which is closing its unprofitable plasma-screen operations, is looking to sell its display factory. The company said it is in talks to sell the factory in Kagoshima prefecture, Kyushu island, to Field Emission Technologies for as much as Ñ30 billion ($283 million).

NEC Corp will acquire NetCracker Technology Corp to add to its offerings for the communications industry and expand its international software business. Though no terms were disclosed in a press release announcing the deal, Reuters put the price at about $300 million. NEC said adding NetCracker, whose business in so-called operations support systems (OSS) and products and services for communication services providers, will help it achieve new international growth and it expects to generate nearly Ñ200 billion ($1.9 billion) over five years.

NEC Corp will also team up with Sumitomo Electric Industries to buy undersea-cable maker OCC Corp for as much as Ñ9 billion ($85 million) from investment company Longreach Group, according to media report. NEC will acquire 75% and Sumitomo Electric, which makes electrical cables and optical fibres, will buy the rest. OCC has about 20% of the global market for undersea cables.

Hitachi and Canon have agreed to jointly develop and manufacture small and mid-size organic electroluminescence (EL) displays for digital cameras within two years. The two firms will transfer a total of about 100 engineers to a new organisation they plan to set up in early July to handle the project. They also intend to build a new production line at an existing plant in Chiba Prefecture to turn out organic EL displays on a trial basis. Based on the results, the two partners expect to build a system to mass-produce the EL displays at relatively low cost, taking advantage of Canon's materials coating technology and production control know-how. Small and mid-size organic EL displays, which are mainly used by makers of cellular phones and portable music players, are currently supplied by Samsung SDI and Toshiba Matsushita Display Technology.

Sanyo Electric will spend about Ñ20 billion ($189 million) to build a new lithium-ion battery plant to meet demand from makers of laptop computers and other devices. The factory, located in Minamiawaji city near Osaka, will start operations in spring of 2009. Together with a facility Sanyo is building in Osaka prefecture, the plant will increase its output capacity of rechargeable batteries by 30% to 90 million units per month. Its main rival, Samsung SDI, is also increasing output of rechargeable batteries to meet demand for portable electronics.


SK Telecom has agreed to sell its ailing US unit Helio to Virgin Mobile. SK Telecom launched Helio in 2006 as a joint venture with US internet service provider Earthlink. It has been in the red since launch, prompting some observers to speculate that EarthLink might not make additional investments in the venture. Virgin Mobile, which is a joint venture between the Virgin Group and Sprint Nextel Corp, has agreed to buy Helio from the two partners for about $39 million, gaining about 170,000 customers in process.

SK Telecom added more customers than its rivals in June to maintain its lead in the country's nearly saturated telecom market. SK Telecom said it attracted a net 142,849 customers last month, with its total subscription base increasing to 22.74 million. No. 2 player KTF ranked second, luring a net 85,191 users, while its customer base rose to 14.17 million. The smallest company, LG Telecom attracted an additional 17,043 customers, with its total number of customers reaching 8.07 million. Based on the latest data, South Korea had 44.98 million mobile phone users out of a population of 49 million as of the end of June.

KT Corp has signed a tentative deal with NTT Corp of Japan to cooperate on business projects in the future. According to a memorandum of understanding (MOU), KT and NTT will jointly seek new business models utilising next-generation broadband communications technologies, initially focusing on overseas venture capital-related areas.

Samsung Electronics and Hynix Semiconductor have forged an alliance to develop next-generation semiconductors so South Korea can stay ahead of foreign rivals. The companies will jointly develop spin torque transfer magnetic random access memory (STT-MRAM) chips under a state-backed program starting in September. The new type of memory chip is expected to play a significant role in flash memory development, by overcoming current capacity limits. The rare tie-up was part of a research and development agreement signed by the heads of all local semiconductor firms and research laboratories and by Lee Young-Ho, the minister of knowledge economy.

South Korean display maker Samsung SDI will boost production of next-generation organic displays to six times the current level by mid-2009 at a cost of $529 million. The move comes as leading panel makers try to grab a piece of the fast-growing market for active-matrix organic light-emitting diode (AM-OLED) displays, which make better-quality, slimmer and more energy-efficient screens than liquid crystal displays. However, makers need to cut production costs and maximise screen sizes in order to see these displays being used in a wider range of applications.

Korean rivals Samsung and LG sold a combined $3.88 billion worth of LCDs in May 2008, securing the top two positions in the global LCD market. A report released by Display Search on 26 June showed that Samsung sold $1.9 billion worth of LCDs in May and achieved a global market share of 24.9%. LG ranked second with a sales value of $1.48 billion. AUO of Taiwan sold $1.44 billion worth of LCDs and ranked third. A total of 4.2 million LCDs were sold globally during May, up 27% year-on-year. Samsung's development of better and larger high-end LCDs has produced stellar sales growth and the company is able to price its LCDs $30 higher than its competitors. On average, each Samsung LCD is priced at $200.

Samsung Electronics will build its second liquid crystal display (LCD) plant in China after it succeeded in producing 82-inch LCD at the Tianjin Display Plant. China Securities Journal reported that Samsung is selecting a place for the construction of the project, which has a scheduled investment of $500 million. The first batch of 82-inch LCDs is expected to service airports and stock exchanges.


Chinese search engine provider Baidu has entered into a tie-up with Nokia Corp that will see Baidu provide a China mobile search platform for Nokia's new "Widsets" service, which will be pre-loaded in Nokia handsets. Financial details of the tie-up were not provided. The report quoted an analyst saying that the Widsets service has over 4 million subscribers in China and the partnership should bring Baidu more mobile customers.

Australian telecom operator Telstra has acquired a 55% stake in two Chinese online companies, in a move that will extend its online business in China. Telstra acquired the stakes in Norstar Media and Autohome/PCPop. Norstar Media operates the popular Chinese automobile device portal Che168.com, while Autohome/PCPop operates an automobile portal, Autohome.com.cn, and a digital devices portal, PCPop.com. All three sites offer information on cars to prospective consumers, including price comparisons, new product reviews and industry news, and each derives its revenue from advertising. Telstra now owns majority interests in three of the leading Chinese companies in the three key online advertising industry segments: real estate, auto and digital devices.

Oak Pacific Interactive Corp, China's second-largest operator of social networking websites, may buy more internet companies before seeking an initial public offering in about two years. Oak Pacific plans to use $100 million received from Japan's Softbank Corp for acquisitions and may target publicly traded Chinese web companies that have underperformed and generate annual revenue of about $50 million to $100 million.

China Mobile will likely expand its TD-SCDMA network to 20 cities before the end of this year, and aims to cover 90% of the population within three years. The remainder of the population in remote and undeveloped areas will likely use China Mobile's existing GSM network. TD-SCDMA subscribers traveling to these areas can have uninterrupted services by using TD-SCDMA/GSM dual-mode phones. It is rumored that China Mobile will launch a new TD-SCDMA equipment tender worth Rmb30 billion ($4.37 billion) in October this year. The company has already spent Rmb14.2 billion to build TD-SCDMA trial networks in eight major cities and is set to acquire the TD-SCDMA trial networks set up by China Telecom and China Network in Baoding and Qingdao.

China Unicom will transfer 30,000 base stations, which were built for the CDMA standard, and sell another 10,000 base stations to China Telecom. The sales are valued at Rmb4.5 billion ($657 million). After the merger of China Unicom and China Netcom, China Unicom will continue to be the investment holding company of the China Unicom Group, but the stake it holds will be diluted to around 33%. China UnicomÆs only asset is an 82.1% stake in China Unicom (BVI), which in turn holds a 71.18% stake in Hong Kong-listed China Unicom.

Beijing Telecom has announced that it will be incorporated into China Telecom's Hong Kong-listed company China Telecom Corp. It also released its 2007 financial report, which shows that Beijing Telecom generated Rmb2.5 billion ($364.6 million) of business income in 2007 and Rmb470 million of net profits.


Hon Hai Precision Industry will continue to expand in Taiwan, China and other places worldwide to meet client demand, despite recent adjustments to its production lines. The company has moved three production lines for connectors back to Taiwan from China and has also announced plans to hire 2,000-3,000 software engineers to develop digital content and other software segments in the southern Taiwan city of Kaohsiung. The company and group members own 20-30 manufacturing plants in China and the three connector production lines account only for a marginal part of the its operations on the mainland.

A total of 558,389 personal computers (PCs), including desktops and notebooks, were shipped in Taiwan in the first quarter, down 19% from the same period last year. IDC attributed the sales decline to relatively weak demand from government entities, enterprises and consumers caused by political uncertainty; as well as weak consumer confidence due to highflying fuel prices and the sagging US economy. In Taiwan, the first quarter is a traditional off season for PC products and the number of workdays is also smaller than in other quarters due to the Chinese New Year holidays.

Hon Hai Precision Industry has invested $25 million to set up a Hungarian subsidiary to facilitate the purchase of assets from Sanmina-SCI Corp. In February, Hon Hai unit Foxteq Holdings agreed to buy some of Sanmina-SCI's personal-computing operations and logistics businesses in Hungary, Mexico and the US. Sanmina-SCI expects proceeds from the Foxteq transaction, along with funds raised from the sale of some related assets not included in the deal, to be $80 million to $90 million.

Taiwan Semiconductor Manufacturing Co will not conduct share buybacks this month as recent disposals by shareholder Royal Philips Electronics have come to an end. TSMC bought back 216.67 million shares, or 0.85% of its issued share capital, between May 14 and June 30. The original plan was to buy back up to 500 million shares, or 1.95% of its shares outstanding, between May 14 and July 13, 2008.

Hong Kong

PCCW has hired UBS to advise it on the possible sale of up to 45% of its newly-incorporated subsidiary, HKT Group. PCCW said it is inviting potential investors to tender proposals. All of PCCW's subsidiaries with the exception of its property and UK broadband units, including the telecom services, media and IT services businesses, are to be consolidated into HKT, which will focus on the group's ôquadruple playö (fixed-line, broadband, mobile & TV) strategy.


Mobile/ wireless
Reliance Communications declined to comment on a newspaper report that it may raise as much as $6 billion from banks to help fund its proposed acquisition of Africa's MTN Group. Lenders including Deutsche Bank, HSBC Holdings and Barclays will probably provide short-term financing for the purchase which values MTN at $35 billion. The Indian wireless operator has been in discussions with a Middle East-based sovereign wealth fund as well as private equity funds to take stakes in a special purpose vehicle for the MTN acquisition. The SPV may take a 35% stake in MTN, worth as much as $12 billion, of which Reliance Communications would pay about $7 billion to $8 billion.

PT Telekomunikasi Indonesia has commissioned Global WaveNET as its technology partner to introduce mobile advertising to the Indonesian market through its subscribers. The MOU was signed last week at Communicasia in Singapore and they will focus on sponsored SMS services in the immediate time frame. The ad spend in Indonesia is very high at around $5 billion annually, but the currently available media for advertising is static and impersonal, hence advertisers are constantly looking for new media for their messages to be properly personalised and targeted. This opens an immense opportunity for advertising in the mobile domain.

Maxis Communications has denied a report saying it is about to sell its 74% stake in India's Aircel to top US phone company AT&T. The unlisted, Kuala Lumpur-based mobile operator reiterated its commitment to build Aircel's mobile business in India, which is the world's fastest-growing cellular market. In May, Maxis said it will spend $4 billion to $5 billion in India by 2009/10 to expand its network. Unlisted Aircel has nearly 11 million subscribers and owns 7,000 telecom towers. AT&T, which has applied for licences in India in partnership with the Mahindra Group, was reported last year to be eyeing a wireless acquisition in the fast-growing market. This year the company will invest $1 billion worldwide for expansion.

MalaysiaÆs Asiaspace is set to roll out its WiMAX service in the third quarter of this year. The target is to cover 25% of the population in Peninsular Malaysia by year-end. The company, one of the four awarded the 2.3 GHz WiMAX spectrum in Malaysia, expects its coverage to increase to 30% next year and to 40% in 2010. The company plans to invest M$500 million ($153 million) over the next three to five years to roll out its wireless broadband service.

Qatar Telecom QSC will be restricted to buying up to 49% of PT Indosat under rules regulating the foreign ownership of fixed-line phone companies that was introducted last year. Foreign companies can by up to 65% of mobile-phone operators. Qatar Telecom has agreed to pay $1.76 billion to buy a 40.8% stake in Indosat held by Asia Mobile Holdings, the Qatari company's venture with a wholly-owned unit of Temasek Holdings.. Q-Tel would have to spend about 3.3 trillion rupiahs (US$358 million) to increase its stake to 49%. Indonesia revised its takeover code last week, raising the threshold that would trigger a mandatory offer to 50 percent from 25 percent.

Total Access Communication (TAC) said CEO Sigve Brekke will resign effective September 1, 2008. The Bangkok-based mobile-phone operator named Tore Johnsen as his replacement. Johnsen, 60, is currently CEO of Telenor Pakistan, and former head of Malaysia's Digi.Com. All three companies are controlled by Norway's Telenor. TAC has tripled its profit since 2002 when Brekke, 48, was named joint CEO. He assumed sole responsibility in 2005 and has helped turn TAC into a presence in the Thai wireless market with more than 16 million subscribers. Brekke will assume a position as CEO at Telenor Asia, overseeing mobile businesses in Malaysia, Bangladesh, Pakistan and Thailand. He will also become senior executive vice president of Telenor Group and will lead TelenorÆs expansion in Asia, looking for opportunities in Vietnam, Indonesia and the Philippines.
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