02.16.2001
Ritek earmarks large portion of CAPEX for optical communications

• Ritek (2349 'Lai De') reports preliminary 2000 sales of NT$22.6b and pretax profit of NT$8.3b, for pretax EPS of NT$6.63. The company is considering paying out a 30-40% dividend (partly cash), lower than market expectations of 40-50%.

• Ritek is to cut 2001 CAPEX to NT$5.5b, compared to NT$20b last year. 55% of CAPEX will be invested in optical communications, and the remainder in portable storage media and display. Ritek is focusing on optical components including DWDM thin film filter, optical transceiver and fiber. DWDM filter is expected to have its pilot run in March for shipment in May. Optical transceiver has already been produced and shipped, bringing in around NT$1.5b sales this year. Optical fiber is expected to see trial production in 4Q01. We expect limited contribution from the optical sector this year.

• Philips recently announced royalties of US$0.045 per unit of CD-R, after Taiwan's Fair Market Committee ruled in January that its CD-R royalty policy was unfair. Ignoring the expenses of other firms, Philips' royalty per unit of CD-R accounts for 22.5% of current CD-R ASP (around US$0.2). Taiwan CD-R makers have requested of Philips a royalty charge of just 3% of CD-R ASP. The two sides are still in disagreement, and the royalty spat looks set to continue.

MarthaChen@Primasia.com +886-[0]2-2547-8878