TCL Group, and InFocus have signed an agreement to set up a 50-50 display joint venture dubbed SMT (South Mountain Technologies) in Shenzhen China. SMT will focus on the development, production, and sales of projectors as well as front and rear projection engines. Production will begin as soon as the Chinese government approves of the joint venture, possibly within the next three to four months. If all goes by the schedule, SMT will be able to roll out rear projection optical engines in the second quarter of 2005. SMT is expected to sell projection solutions to TCL and InFocus as well as to other makers throughout the world.

 

Engineering talent from the two parent companies will be seeded to provide SMT technical aid. Throughout 2005, each parent company will invest US$10 million, for a total of US$20 million, into the new company, while each side will first put in US$1.5 million to cover initial organizational expenses.

 

The joint venture will consist of one offshore parent holding company with three wholly owned subsidiaries, an R&D and manufacturing subsidiary in Shenzhen China, and R&D centers in the US and Norway.

 

TCL, owner of 20,000 outlets in China, has another joint venture with Thomson, called TTE. TCL plans to outsource to SMT the light engines used in TTE's rear projection TVs.

 

After the team-up, InFocus, maker of office-use digital projectors as well as home-use high definition TVs and movie projectors, will be able to manufacture in China, thereby avoiding a 26% import duty. In addition, it will receive royalties from TCL on all products that SMT sells to other original equipment manufacturers.