Lite-On IT and BenQ announced that they have formed a strategic alliance, in order to boost the overall competitiveness of the storage sector. Representatives of both companies declared that they expect an increase of Lite-On IT's global market share to 27%, making it the world's No. 2 optical disk drive (ODD) maker. But that remains to be seen.

As part of the transaction, 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.

"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," declared 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," Soong added.


BenQ will receive approximately $1.2 billion in cash and acquire a 13% stake in Lite-On IT. With this transaction, BenQ will become Lite-On IT's second largest shareholder. 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.