Dell Computer Corp has reacted strongly to the worldwide shortage of screens for portable computers by tying up Korean electronics firm Samsung Electronics Co Ltd to supply it with thin-film-transistor (TFT) liquid crystal displays in a deal worth $8.5bn over five years.
The screens will be used in Dell’s notebooks and flat-panel monitors, a sector currently growing at almost 50% per quarter. There is an availability issue, said a Dell spokesperson, who referred to Michael Dell’s remarks in the wake of the Taiwan earthquake, when he said that the chip shortage did not compare to the lack of screens.
The deal is sweetened by Dell taking $200m in convertible bonds, giving Samsung a healthy chunk of working capital as well as a more stable sales curve for its TFT business. The bonds give Dell a strong bargaining position as demand for screens further outstrips supply as well as being what the official called a good, sound investment on its own merits, gaining Dell an opportunity to cash in the bonds in three years time. The deal fits into a series of big Dell supplier contracts. Its OEM agreements with IBM for PC components in March and September totaled $24bn.
