Compal LG's joint venture in Kunshan builds plants against Hon Hai

According to the Taiwan Economic Daily, Chen Ruicong, the general manager of the leading OEM of notebook OEM, confirmed yesterday that it has established a joint venture with LG Display, the top three notebook panel maker in the world. According to industry analysts, after the alliance between the two sides, Compal is expected to ensure that the panel sources, LG has a larger shipping channel, the front against the Hon Hai system is also more stable.
Chen Rui-Cong said that the two parties will set up a joint venture "Le Bao Display Technology" in Kunshan City, Jiangsu Province to produce, assemble and sell notebook-related parts and components. Lebao displayed a technological capital of US$15 million, Compal Investment’s US$7.35 million, and a shareholding of 49%. Other details of the joint venture are still being negotiated.

Chen Ruicong analysts said that in order to deal with Hon Hai's continued expansion of notebook shipments, other notebook foundries need to accelerate the pace of vertical integration: "They (Hon Hai) can do it (notebook OEM), can we not do the past (parts manufacturing) ?"

According to industry analysis, Compal with LG, Compal will obtain a panel supply source with price elasticity and stable shipments, and Compal notebook shipments will exceed 60 million units next year. In addition, Compal's move may also be related to the supply of flat panel panels, Compal has made Acer tablet shipment orders next year, but also requires a stable source of panel shipments.

Samsung, LG and AUO are the three largest notebook panel suppliers in the world. Although under normal circumstances the panel belongs to parts purchased by Hewlett-Packard, Acer and other brand factories, but the strength of the foundry also has the right to purchase the panel, like the current Guangda borrowed from the year Guanghui into AUO, still holding shares in AUO, In the notebook OEM battle, Compal also needed fire support from panel suppliers.

The supply of notebook panels is a customized product with a high technical threshold and long-term market share by Samsung, LG and AUO. However, as the notebook market matures, and New Chi Mei is in hot pursuit, LG, through its alliance with Compal, can also expand its shipping channels and ensure customer base.