Hitachi Cable Withdraws from COF Tape Business

Hitachi Cable announced on Monday the firm withdraws from COF (Chip on Film) tape business. COF tape is material to implement driver IC on liquid crystal panels. The firm will terminate COF tape production at the end of March 2011 at its production subsidiary, Hitachi Cable Film Device, in Yamanashi Prefecture, Japan. The subsidiary’s 203 employees will be relocated to other group companies of Hitachi Cable or Hitachi. Meanwhile, Hitachi Cable plans to utilize operation site and facilities such as clean rooms at Hitachi Cable Film Device after termination of COF tape production.

Hitachi Cable’s annual revenue of COF tape business was 8.8 billion yen in fiscal 2009 ended in March 2010. The revenue is estimated at 3.5 billion yen for fiscal 2010. The firm has posted losses in the business since fiscal 2007.

Market condition of COF tape is seriously tough. Hitachi Cable decided the withdrawal with little outlook of order volume recovery and profit improvement. Price competition became significantly severe in and after 2007 when South Korean and Taiwanese COF tape makers entered the market. At the same time, the market demand dropped after global recession and recently entered inventory adjustment phase several months ago.

In June 2008, Hitachi Cable acquired Casio Micronics’ COF tape business and started operation of Hitachi Cable Film Device in order to improve the business profitability by scale expansion. Hitachi Cable integrated the productive sites and, in June 2010, implemented additional business optimization including encouragement of voluntary retirement. However, the firm couldn’t improve the business profitability.