03.20.2001
Speculation abounds on Gigastorage - Ritek merger

• Gigastorage Corp. (2406 'Guo Shuo') estimates March revenue at around NT$100m, for 39% growth MoM. An improving utilization rate, rather than an upward trend in ASP, is behind the increase. We believe the ASP on CD-R will likely rise in 3Q01. Utilization has risen to 70%-90% in 1Q01 from a low 50%-60% in 4Q00.

• According to market speculation, tomorrow's board meeting will discuss two key issues: restructuring Gigastorage's board of directors, and a merger with Ritek Display (unlisted), a subsidiary of Ritek (2349 'Lai De').

• Ritek purchased a 10.6% holding in Gigastorage last month at NT$26 per share. Ritek is expected to place one or two of its own directors on the board.

• Ritek further increased its investment in Ritek Display last week to 65.11% ownership. Apart from share transfer, we expect to see business collaboration between Ritek and Gigastorage.

• Gigastorage will likely merge with Ritek Display in order to diversify. Gigastorage has purchased technology patents on Organic Light Emitting Devices (OLED). The alliance would furnish Ritek with more CD-R capacity and enhance its dominant status in the area of CD-R.

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