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Business News | Mar 26, 2007

LED chipmaker Arima Opto spins off LD business

The board of directors at Arima Optoelectronics (Arima Opto) has decided to spin off its laser-diode (LD) division and set up a new company named Hua Xin Optronics (transliterated from Chinese), according to a company filing with the Taiwan Stock Exchange (TSE).

After the restructuring, Arima will focus on the LED chip business, the company said. The spin-off of the LD division will go effective on August 1, 2007, said the filing, indicating that the company will be a wholly-owned subsidiary of Arima Opto and have a capital of NT$550 million.

After the announcement of acquiring Cleavage Enterprise, a Taiwan-based company specializing in cutting and inspecting LED chips, in mid-February, Aria Opto has decided to spin-off its LD business to integrate resources and develop branding business, noted Arima. Arima set up the LD business in 1999, with Sony and Mitsubishi Electric being its major partners. The LD division generated around NT$1 billion in 2006, accounting for 32% of the overall revenues of Arima Opto, according to sources. Arima said the monthly revenue level from the division exceeds NT$100 million, with the revenue breakdown for ODM/OEM and branding businesses at 65% and 35%, respectively. Arima Opto expects the division to rely more on branding business in the future.

Meanwhile, the company said it plans to seek strategic partners for Hua Xin. The new company has no plan to increase capital but may deal out some stakes for the partners to purchase, Arima pointed out. Today`s Chinese-language Apple Daily cited sources in saying Arima Opto will invite Sony and Mitsubishi to invest in the new company.

Arima Opto said it has not decided whether Hua Xin will list on the main board of TSE or over-the-counter (OTC) exchange. In related news, Arima Opto said it expects to continue expanding its LED chip capacity, with the monthly capacity of AlGaInP (aluminum gallium indium phosphide) LED chips to reach one billion units this year, up from 600 million before while that for its blue LED chips to also increase to 300 million units this year, up from 200 million before, the company said.

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