 2011-08-03 |
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(Economic Daily News / Reporter Yih-Lang Chou, Taipei) YC is pursuing vertical integration by establishing its subsidiary ACHEM Petrochemical, which will enter the upstream petrochemical industry. Chairman Lee Chih-Hsien said yesterday (August 2) that the company may set up a plant in the eastern region of China with an investment of USD 48 million (approximately NT$1.39 billion), to be carried out in two phases. The first phase is expected to begin production in 2013. The project has already been submitted to the Investment Review Committee last week, with results expected by the end of the month.
Lee Chih-Hsien stated that ACHEM Petrochemical is the largest single investment project since the founding of the YC Group. The project was submitted to the Investment Review Committee last week, and the final plant location is expected to be decided by the end of August during the group's high-level meeting. Production is anticipated to start in 2 to 3 years. Lee also set a revenue goal of exceeding NT$20 billion for the company within five years.
ACHEM Petrochemical is a subsidiary of YC, and since the project has not yet been approved by the Investment Review Committee, the company has not disclosed detailed production plans. However, they mentioned that ACHEM will operate in the upstream petrochemical sector, competing directly with Formosa Plastics. Currently, Formosa Plastics is the only domestic producer in this high-tech, high-profit sector.
Lee emphasized that YC’s decision to enter the upstream petrochemical industry is akin to its decision to venture into the BOPP film business ten years ago, a challenging move in its early stages. ACHEM Petrochemical will be based in China, but raw materials will be sourced from Japanese and Korean petrochemical companies to ensure better material supply and pricing.
As for its March acquisition of electronics company Tien Chih Technology, YC has secured all board and supervisor seats, currently holding 41% of shares. Lee noted that Tien Chih has a small presence in the compact PC business, which is somewhat related to cloud computing. The company is expected to continue to incur losses this year, but there is a chance it could turn profitable next year. |
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