Following monthly losses of NT$80-90 million from its telecommunications division, Lite-On Technology announced today that it will discontinue its handset-assembly business. However, unspecified analysts have pointed to BenQ's recent acquisition of Siemens AG's handset division as being a major factor in Lite-On's decision.

In addition to the monthly losses the company has incurred, Lite-On also stated that its handset assembly business accounted for only 3% of its revenues for the first five months of this year, and once it exits the business, those losses are expected to ease. So far this year, the company has shipped 2.2 million handsets, according to company CFO Andrew Lin.

However, the company's decision to exit the handset assembly business comes on the heels of BenQ's recent announcement that it was acquiring Siemens' handset division. According to sources at Lite-On, Siemens is a major OEM customer for Lite-On, and the analysts believe the decision to phase out its assembly business is mainly due to BenQ's acquisition.

Lite-On's other major customers include Alcatel, LG Electronics and Nokia, the sources stated, and Lite-On has noted that it will complete all of its current orders before phasing out its assembly business.

Other market sources have speculated that there may be more fallout from sale of Siemens handset business to BenQ. According to the sources, Siemens also places OEM orders with Flextronics, Quanta and China-based CECW (China Electronics Corporation Wireless) for its handset production.

Siemens places annual handset orders worth US$400-500 million with Flextronics and is the OEM giant?s second largest customer, the sources stated.