First, here's what we know: On October 31 it was announced that in the third quarter Nam Tai began investing $70 million in LCD module manufacturing equipment for telecommunications subassemblies in Wuxi, with plans to start production at the end of the year. Nam Tai also plans to invest $60 million more for similar equipment for Shenzhen in phase 2, to begin in early 2012 and begin high volume production about June. "Japanese multinational corporations" were mentioned in connection with these two plans for growth. On November 14 Nam Tai announced that a major customer contract was signed and that high volume production would begin at the end of December, with shipments at the beginning of January. Discussions with a "second major customer" for the Shenzhen expansion are ongoing. The Wuxi contract is for "LCD modules" while the possible Shenzhen contract is for "LCD module subassemblies for smart phone applications." Sales for 2012 may be "more than double" those for 2011.
And now some interesting information: August 31 the Innovation Network Corporation of Japan, Hitachi Displays, Sony Mobile Displays, and Toshiba Mobile Display Co. made a memorandum of understanding to merge, making the biggest display company in the world for small and medium sized displays, with ownership 70%, 10%, 10%, and 10%. On November 15 (the day after Nam Tai's announcement of a customer) it was announced that the merger had been made official and a CEO had been chosen. Japan Display will officially begin operations in the Spring, though of course the Hitachi/Sony/Toshiba factories are already producing things.
Hitachi, Sony, and Toshiba are all independently either current or past customers of Nam Tai. I would guess that now Nam Tai sees an opportunity to expand by getting the business of the new largest display company in the world for small and medium size displays, Japan Display, as it is composed of three of their customers plus the INCJ. In the long term, this could be a fantastic opportunity and result in massive sales. Whether the Wuxi expansion, the Shenzhen expansion, or both are aimed at Japan Display is hard to say, but I would guess that one of the two is, though probably not both since they used the phrase "second major customer."
Japan Display also bought a factory from Panasonic and is adding a production line to it for smart phones. They expect to take control of it in April, and add the production line thereafter.
Sharp is retooling its Kameyama plants 1 and 2 to start making smaller LCD panels by the end of the year, including panels for the ipad 3. Sharp currently supplies panels for the iphone. Sharp is also a current or past Nam Tai customer, and is the other likely customer in addition to Japan Display. Perhaps Sharp is the Wuxi customer while Japan Display is the possible customer for Shenzhen.
Thanks for the insight. I hope they hurry up and start moving some profitable volume through these plants. All chinese stocks appear to be getting punished in this market. - Showing sales increases and increasing profits will help... NTE is very undervalued at thsis level. - Added some more @ $5.02 this afternoon. Running out of dry powder- time to start moving up! At least we will get the 5.6% dividend while we wait!