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SVA calls off LCD-panel deal

SVA Group will not to sell its LCD-panel manufacturing business to its listed subsidiary SVA Electron Co as originally planned, because the unit has started to lose money during the global economic slowdown, the Shanghai-based firm said yesterday.

The move means a delay to Shanghai's ambition to develop advanced LCD production lines, as SVA is the city's biggest LCD-panel maker, analysts said.

According to the original plan, published in June last year, Shanghai-listed SVA Electron Co would have bought around 82 percent of SVA Group's fifth-generation LCD panel business, SVA Optronics. It already owned about 18 percent of the business.

"SVA Optronics has incurred a huge loss since the second half of last year as product prices dropped due to the changing financial environment," SVA Electron said in a statement to the Shanghai Stock Exchange.

SVA Electron lost 850 million yuan (US$124 million) in 2008, and 510 million yuan the previous year.

LCD panels are widely used in computer monitors, LCD TVs and portable multi-media players.

The global LCD industry faced a tough time in the second half of 2008 due to oversupply, resulting in a prices dropping up to 30 percent, said DisplaySearch, a United States-based IT consulting firm.

Now SVA Electron, which stopped trading on April 15, has decided to halt the purchase of SVA Optronics, said the company.

SVA has had problems for a long time, such as low efficiency, and bad product design and management style, which doesn't meet the requirements of a modern business, an industry source, who declined to be identified, said.

SVA was formerly in talks with Sharp to build an advanced production line in Shanghai, but the plan failed due to a lack of capital.

Beijing-based BOE, SVA's main rival, invested 17.5 billion yuan to build an advanced LCD-panel production line in Hefei, Anhui Province, last month.



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