Qualcomm to build $1B e-reader display factory in Taiwan

So e-readers are still a good business opportunity?

Wireless technologies developer Qualcomm will build a US$1 billion plant in Taiwan to make low-power color displays, Taiwan's economics ministry said on Monday. It's a breakthrough for the historically high-tech island that has lost manufacturing capacity to China due to that country's lower costs.

Qualcomm's factory will manufacture small and medium-size mirasol-brand displays, which are particularly suited for eReaders, the ministry said.

Mirasol is based on reflective technology called interferometric modulation (IMOD), according to Qualcomm's website. The firm describes it as "extremely low power and highly reflective, meaning the display itself can be seen even in direct sunlight." It has been described as lower energy than thin film transistor liquid crystal displays.

The factory's location in Taiwan's Hsinchu Science Park will put it close to suppliers and a large educated labor force. It will generate new jobs on the island hit by the global economic downturn of late 2008, the ministry said.

Qualcomm already has a mirasol factory at the same site, which began production in June 2009.

Preparation work for the new seven-hectare plant has already started, a ministry official said, but the company has not released a construction timeline or estimated annual production.

Officials from San Diego-based Qualcomm were unavailable for comment.

Taiwan began courting Qualcomm at a meeting in the U.S. in 2008. The firm's decision to locate the factory in Taiwan comes despite the lure of neighboring China over the past decade. But rising labor costs in China, a drop in Taiwan's corporate income tax last year and closer trade links between the two have shifted investor attention back to the island long known as a global tech production base.

"It's a reflection that the cost differences between China and Taiwan have clearly shifted in favor of Taiwan," said Wai Ho Leong, regional economist with Barclays Capital in Singapore. "In China there are a lot of hidden costs."

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