Trade Resources Industry Views HC Semitek Seals RMB 1.08 B Acquisition Deal with Sapphire Maker Crystaland

HC Semitek Seals RMB 1.08 B Acquisition Deal with Sapphire Maker Crystaland

HC Semitek board approved the acquisition of Chinese sapphire substrate manufacturer Crystaland during a recent shareholder meeting.

The acquisition deal signals the company is extending its reach into the upstream LED market sector, and market trends suggest HC Semitek might intend to move into the consumer electronic sector as well.

HC Semitek will be acquiring 100% of Crystaland shares for RMB 1.08 billion (US $170 million). A majority of the transaction will be paid in the form of company stocks, HC Semitek plans to issue an additional 93.42 million shares at RMB 9.91 per share. About RMB 154 million of the transaction will be paid in cash.

Another 67.26 million shares will be issued by the company at RMB 8.92 per share to high ranking officers at one of its subsidiary in Shanghai, the list includes HC Semitek Chairmen Fuyun Zhou, Aiming Yeh, and a member of the company’s board of supervisors Zhongdong Yang.

Lens Technology has acquired the Bridgman–Stockbarger technique for sapphire crystal growth, and its current equipment can meet technology demands for 2-inch to 4-inch sapphire substrates. The company has succeeded in the R&D phase of applying the technology onto 6-inch sapphire ingots, and is quickly entering the mass production phase. The company’s 4-inch sapphire product yield rates have exceeded 85%.

HC Semitek is currently China’s second largest LED epiwafer manufacturer. After the company completes third phase constructions of its Suzhou factory, its 4-inch LED epiwafer production capacity will rise to 656,000 PCS per month. All this will be effective in ridding Crystaland's sapphire substrate capacity.

Following the recent transaction, HC Semitek’s main business will extend from LED chip manufacturing to upstream sapphire ingot and sapphire substrate manufacturing, and completely integrate upstream and downstream LED supply chain, said HC Semitek Chairman and Vice President Aiming Yeh.

HC Semitek will also be able to expand its production capacity in the consumer electronic industry after absorbing Crystaland. If there is explosive demands in the future, the company will also be able to rapidly expand its business in this new applications sector, and increase its profitability.

The recent investment project is expected to increase Crystaland’s sapphire substrate production to 12 million PCS (based on 2-inch substrate calculations), and sapphire window material production capacity is to climb up to 500,000 PCS. Sapphire substrates are mainly applied in LED chip production, while sapphire window materials are usually in consumer electronic products home buttons and camera lens. The two product projects will be using an estimated RMB 324 million from the total funds raised.

Worth noting, HC Semitek’s share value closed at RMB 5.81 Wednesday, lower than evaluated value for the acquisition. In response, Yeh said the two companies will be dedicated to working on a smooth transition, and they will be striving to follow the original agreement. However, adjustments will be made to the acquisition deal if needed.

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Topics: Lighting