Cut and Run
A Korean LCD panel maker is in danger of factory shutdowns after being sold to a foreign firm. There is growing criticism about companies that take technologies away from newly-purchased firms without any kind of investment.
Hydis Technologies is a TFT LCD company in Korea, and Taiwan-based E-ink is the largest shareholder of the company. E-ink held an emergency board meeting on Jan. 6 and decided to halt factory operations at Hydis. On the following day, the Taiwanese firm notified relevant government agencies that it will close factories and discontinue production. It also informed them that it will lay off 380 workers on the grounds that it is difficult for the Korean company to survive.
Hydis Technologies is the first LCD panel maker in the country. It started as a Hyundai Electronics LCD unit in 1989, ahead of other companies, which entered the LCD industry in the 1990s. The firm separated from Hyundai Electronics and became an independent company called Hydis Technologies in 2001. The following year, it was sold to BOE in the process of the separate disposal of the bankrupt Hyundai Electronics.
However, BOE only invested in production lines in China, not Korea. Due to deteriorating business conditions, BOE Hydis filed for court receivership in 2006. At that time, BOE demanded that BOE Hydis hand over patents for LCD panels, without suggesting any measures to rescue the money-strapped company. As a result, this case has been mentioned as an example of technology leakage.
In the end, the troubled company was sold to E-ink. However, E-ink also took away Hydis' technologies by obtaining patent royalties from other Taiwanese firms without any kind of investment in facilities or new technologies. That is the reason why E-ink cannot avoid the criticism that it is a typical foreign company that disposes of its Korean affiliates after absorbing technologies.