The investment in CANDO by TPK is an indication of the beginning of an era where large will become larger through merger and acquisition in the industry of touch panel module. The research institution WitsView under TrendForce has pointed out that this investment will lead to complimentary benefits for TPK in the three aspects of production capacity, technology and customer base.

 

First on the production aspect, TPK’s touch sensors have been in short supply benefited from steady demand from Apple iPad. Although the production capacity can be enhanced by production line expansion, the huge amount of investment required for touch sensor production line will be an extremely heavy burden to capital expenditure and follow-up depreciation cost. Moreover, the new capacity will not be ready in time to meet current demand due to the one year construction lead time for production expansion. According to the analysis by WitsView, the touch sensor production line of CANDO at this stage is mainly converted from original Color Filter Fab which is matured and near the end of depreciation amortization. It can not only fill up TPK’s demand for touch sensors, but also provide TPK with more flexible and superior cost structure than their other suppliers.

 

From technology perspective, TPK is the best in the yield rate in terms of lamination capability of double glass touch module, while CANDO is one of the few in this industry with leading technology development of “Touch on Lens” single glass touch module. WitsView has pointed out that in this touch module market with diversified development, traditional double glass touch module still accounts for the majority of demand while numerous customers have been attracted by the low-cost, light-weight, thin single glass touch module recently. The investment in CANDO will allow TPK to combine these two major solutions as their best weapon for customers with different demands in the future.

 

The benefits introduced by this investment have been more apparent in terms of the complimentary effect of customer orders. Currently major customers of TPK have been focused on the leading brand Apple. Although CANDO is also one of Apple’s suppliers, its main touch module shipments have been spread over first tier Non-Apple mobile phone and computer brands. The overlap of these two customer bases is not high at all. From WitsView’s point of view, if we take Tablet PC as an example, TPK has been enjoying great success at current market dominated by Apple. Even if non-iPad products achieve breakthrough in terms of market share in the future, TPK will also benefit through supply system of CANDO. This way the risk due to future market development can be minimized.

 

WitsView has emphasized that the demand for touch module will remain strong this year under the premise of sustained hot sales of Tablet PCs. The cooperation between TPK and CANDO has been undoubtedly the outstanding demonstration on horizontal integration in the touch module industry creating competitiveness which cannot be duplicated by other competitors any time soon.