Lite-On IT and BenQ have formed a strategic alliance that will enhance the overall competitiveness of Taiwan’s storage sector. The transaction is expected to increase Lite-On IT’s global market share to 27%, making it the world’s No. 2 optical disk drive (ODD) maker.

Lite-On IT will acquire BenQ’s storage-related assets, including BenQ’s ODM customer portfolio and the rights to use BenQ’s technology portfolio. Lite-On IT will also receive order commitments on BenQ-branded storage products. BenQ will receive approximately NT$1.2 billion (US$ 36.8M) in cash and acquire a 13% stake in Lite-On IT. With this transaction, BenQ will become Lite-On IT’s second largest shareholder and a long-term strategic partner. Additionally, BenQ will acquire two seats on Lite-On IT’s board of directors. Both companies expect to close the transaction on or about 1 June 2006.

“This strategic alliance combined with our manufacturing advantages, will allow Lite-On IT to further sharpen its competitiveness in the ODM market and become the No. 2 ODD manufacturer worldwide,” said Raymond Soong, Chairman of Lite-On IT. “In partnering with BenQ, Lite-On IT expects to benefit from increased manufacturing efficiency, greater economies of scale, and a larger market share.”

“BenQ will continue focusing on the marketing and sales of our storage products and this strategic transaction will allow BenQ to better address our ODD branded and 3C opportunities and customers’ needs,” said K.Y. Lee, Chairman of BenQ Corporation.