Dii Group to Provide TV Set-Top Boxes for Wide-Scale Launch of Digital Video Technology Throughout China
03/23/99
PR Newswire
(Copyright (c) 1999, PR Newswire)
NIWOT, Colo., March 23 /PRNewswire/ -- The Dii Group, Inc.(Nasdaq: DIIG), and Capetronic International Holdings Limited today jointly announced that they have entered into a strategic partnership to provide end-to-end digital platform solutions for delivery of video entertainment, data and educational materials to the Mandarin Chinese-speaking market. The partnership has an exclusive agreement pending with Ministry of Culture's China Audio and Video Publishing House (CAVPH) to supply the technology to deliver these video materials. In addition to state-of-the-art video and data transmission, the technology will be used to combat video piracy in China. First year plans also include service delivery in Singapore, Taiwan and Hong Kong.
(Photo: newscom.com )
Dii will invest US$15 million to acquire preferred stock, which can be exchanged into common stock of Capetronic, a Hong Kong publicly traded company. Ronald R. Budacz, chairman and chief executive officer of the Dii Group, will join Capetronic's board of directors. In return for its investment, Dii will have the exclusive right to manufacture the majority of the venture's TV set-top boxes and will direct the production of the remainder. Production of the set-top boxes is expected to commence in the fourth quarter of 1999, and anticipated revenues for the year 2000 will make it a top-five revenue generating program for the Dii Group. Manufacture of the electronic devices will occur mainly at the Dii Group's Zhuhai, China, manufacturing campus.
Capetronic's wholly owned subsidiary, DVB Company, will act as the systems integrator for the multi-year project. DVB has a number of exclusive arrangements and joint ventures pending in China that provide video materials to be transmitted and exclusive rights of distribution. DVB will provide CAVPH with technical services to distribute approved video rights to first-run Mandarin movies for planned digital video delivery to theaters and thousands of other entertainment venues throughout China. In addition, data and material for distance learning can be transmitted. The existing telecommunication and cable network infrastructure will be utilized, and interactive communications will be introduced over time.
"Smart Card" technology will be used to handle receipts, and cable and other network operators will control most hardware sales or leases to end-users. The technical model for the electronics equipment will employ an open architecture scheme with expected collaboration provided by China Aerospace, Pace Micro Technology of the United Kingdom, and Scientific Atlanta from the United States.
Bruno Wu, DVB's chief executive officer, commented, "After years of exhaustive fact-finding, planning, technical development and partner selection, we are ready for the full-scale project launch. The market potential for providing value-added service applications to existing networks is overwhelming -- there's already an installed base of nearly 320 million TV sets in the PRC alone, and the economic growth rate is expected to be very high for the foreseeable future. Furthermore, there's virtually no similar technology in the market. We anticipate that this project will ramp up quickly -- we have already received our first letter of intent for 500,000 units from a local PRC client, one of more than 100 cable TV operators of its kind in the country. As an added benefit, China's Ministry of Culture anticipates this project will help curb video piracy by providing near-instantaneous release of video rights to first-run movies throughout China at a fraction of the cost of pirated videos."
Wu continued, "Our unique strategy, marketing know-how, and familiarity with this region, combined with Dii's demonstrated commitment to bring leading-edge, vertical manufacturing technology to China, provide an elegant technical solution to the digital video needs of this region. Dii's vast experience manufacturing TV set - top boxes on two continents, combined with its large manufacturing presence in the PRC, made it the natural choice as our partner."
Dii's Ronald R. Budacz stated, "We are honored to have been invited to participate in this venture, which has been structured to provide the Dii Group a preferred manufacturing arrangement for more than seven years. Certainly the commitment we made to the Chinese market in August of last year, when the Dii Group purchased a 1.5 million sq. ft. integrated electronics manufacturing campus in Zhuhai, was due to our confidence that the local market would provide compelling opportunities. Through the combined capabilities of the Dii Group companies, we will provide order fulfillment, box build, test, printed circuit assembly, and printed circuit board fabrication from our local facility in Zhuhai. We also plan to provide design services, and eventually semiconductors, from our other worldwide locations. As order volumes for the project begin to exceed our planned plant capacity allocation, Dii will participate in the selection of other local manufacturing partners."
This press release contains historical information and forward-looking statements. Statements looking forward in time involve risks and uncertainties, including risks associated with customer concentration, dependence on the electronics industry, economic conditions, the successful integration of newly acquired businesses and other risks associated with acquisitions, changes in product mix, competition, and international operations. For further information, reference should be made to the Dii Group's filings with the Securities and Exchange Commission, including the company's "Management's Discussion and Analysis of Financial Condition and Results of Operations" included in the company's most recent Annual Report on Form 10-K.
Capetronic International Holdings Limited (HK Listing No. 500) is a Hong-Kong based electronics company. Its subsidiary, DVB Company, provides end-to-end digital video platform solutions for value-added services on existing networks. Its turnover for 1998 was HK$850 million.
The Dii Group, Inc. (Nasdaq: DIIG) is a leading, value-added electronics design and manufacturing outsource service provider, which operates through a global network of companies in North America, Europe, and Asia. The company serves the electronics industry through its core competencies: circuit design; semiconductors; printed circuit boards; circuit board assembly; box build and distribution. The Dii Group employs approximately 8,000 people and had revenues of $926 million in fiscal 1998. Its Internet (Web) Site can be reached by accessing "www.diigroup.com" to view recent press releases, company information, and financial data relating to the Dii Group.
Contact: /CONTACT: Sharon L. Sweet, Vice President, Investor Relations of The Dii Group, Inc., 303-652-2221/ 21:08 EST
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