Hitachi Cable to Buy COF Unit from Casio Micronics

Hitachi Cable announced on Friday the firm started study to purchase COF (chip on film) unit of Casio Micronics. They keep talking for the assets, purchase method, value and timeframe finalizing the contract by March end. Hitachi Cable tries to expand the business through the acquisition while Casio Micronics withdraws from the business when COF price plunges. Casio Computer’s subsidiary, Casio Micronics makes electronic parts including packaging products for semiconductor. The COF unit posted 12.721 billion yen of sales in fiscal 2006 ending March 2007. Hitachi Cable makes COF tape in Yamanashi and Ibaraki. The firm expects the acquisition brings synergy for the business making integrated production system from tape to packaging. Casio Micronics built no.2 plant in Yamanashi in fiscal 2006 to improve the profitability with larger volume and higher valued products. However, the firm is suffered from lower price and oversupply market. The firm expects the sales decreases by 6% in fiscal 2007 from fiscal 2006. The firm decided the sales of the unit when the firm expects the unfavorable market continues in short term. Casio Micronics expects COF price for liquid crystal panel decreases by 18% in second half of fiscal 2007 from same period of previous year after the price dropped by 15% in the first half. The firm estimates the supply capacity is almost 2 times of the demand when major 10 companies in Japan, South Korea and Taiwan expand the capacity. Mitsui Mining & Smelting, which is estimated to have around 25% of market share, leads the market and other smaller makers are in severe competition.