February 12, 2008 / 10:16 AM / 11 years ago

Top PC firms at risk from Taiwan monitor maker fire

TAIPEI, Feb 12 (Reuters) - A fire at Taiwan’s Lite-On (2301.TW), the world’s fifth largest desktop monitor producer, could disrupt supplies to the PC industry, with Dell DELL.O, HP (HPQ.N) and Lenovo (0992.HK) particularly at risk, an industry researcher said on Tuesday.

The fire at one of Lite-On’s factories in China this month had caused initial damage of around T$2.266 billion ($71 million). The company said no one was hurt in the incident.

Lite-On Technology, which makes flat-screen monitors, projectors and computer equipment, said the losses included structural damage of a building, and damage to some equipment and stocks.

Fourteen production lines of liquid crystal display (LCD) monitors were also interrupted, the company said in a statement.

The factory, located in the southern Chinese city of Dongguan, caught fire after an electrical line short circuited.

“This could have a major impact on the landscape of the desktop monitor industry in the first and second quarters of 2008, but most probably in regards to share shift rather than in overall supply and demand,” said DisplaySearch analyst Chris Connery in a report.

He added that Dell, HP and Lenovo — Lite-On’s top contract partners — could suffer from supply distruption.

But Connery added that if the Taiwan firm outsources its own production to local competitors or if the PC companies switch to Lite-On competitors the damage could be limited.

According to his estimates, Lite-On supplied 22 percent of HP’s monitors in the third quarter of last year, and it also supplied 20 percent for Dell and 19 percent for Lenovo.

In the third quarter of 2007, Lite-On had 7.8 percent of the LCD monitor contract manufacturing market, while TPV Technology (0903.HK)(TPVH.SI) came first with 21.6 percent, followed by Innolux (3481.TW) with 17 percent, Samsung Electronics (005930.KS) with 12.4 percent, and LG Electronics (066570.KS) with 7.9 percent.

Lite-On shares fell by the daily 7 percent limit on Tuesday, underperforming the broader benchmark index .TWII, which shed 1.6 percent.

The Taiwan firm said the damages should be fully covered by insurance, and any impact on its business was still being assessed.

Damage from the fire is expected to be reflected in the company’s second-quarter financial statement. (US$1=T$31.88) (Editing by Baker Li and Louise Heavens)

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