Kao Fong to produce semiconductor-manufacturing equipment

Taipei, June 30, 2005 (CENS)--Kao Fong Machinery Co., Ltd., one of Taiwan's leading manufacturers of computer numerically controlled (CNC) machine tools, will venture into the production of semiconductor-manufacturing equipment after its new plant in Taichung Science-based Industrial Park commences operation by the end of this year.

The statement was made by Chuang Kuo-hui, chairman of Kao Fong, at an annual general shareholders' meeting recently held at the company's headquarters in Taya of Taichung County, central Taiwan. The company said it would see substantial growth in sales to the U.S. market this year.

At the annual meeting, Kao Fong also passed a resolution to dispatch a dividend of NT$0.5 (US$0.015 at US$1:NT$31.3) in cash. Shareholders participating in the meeting also passed a proposal authorizing the company's board of directors to increase investments in mainland China as the regulation allows.

There is a rumor that Kao Fong will set up a joint-venture company in mainland China with a Japanese manufacturer of machine tools with each side offering US$1 million.

At present Kao Fong has already operated a plant in Kunshan of Jiangsu Province for the production of small-sized machine tools.

Kao Fong president Chan Chih-cheng noted his company suffered a sharp decline in earnings last year because of foreign exchange fluctuations and a sharp rise in the prices of materials. But Chan said things will get better this year as his company will benefit from market diversification and enjoy increased orders.

Kao Fong's parent in Taiwan has received orders to fully occupy production lines through the end of the third quarter of this year. In addition, the company still has in hand orders for 142 machine tools.

Thanks to the booming development of the world machine-tool market, according to Chan, Kao Fong has seen increasing orders so far this year. The company estimated it would complete development of such new product lines as V3300 linear motor-based double-column machining center and HMC630 horizontal machining center sometime in the third quarter of this year.

With an annual production capacity of 10 machine tools, Kao Fong's Kunshan plant is expected to begin making profits in the second half of this year. In addition, the company's U.S. subsidiary has seen first-quarter output surpass the total of last year.

Kao Fong said it would be able to roll out 600-strong machine tools, including those made by overseas subsidiaries, up 25% from last year.