Vertical Divider
Epistar/Lexar Merger Driven by Mini LED Investment Requirements
June 21, 2020
Epistar and Lextar plan to merge into an as yet unnamed entity. After share conversion, the new holding company is expected to have a capitalization of TWD 6.8 billion (US$ 220.83 million), which is believed to gain more financial flexibility and customer breadth to draw more capital. The concept is to capture the strengths of Epistar which is the production of LED chip level product, and that of Lextar, with LED packaging and module production capability, so as to avoid the duplication of R&D and provide customers with a vertically integrated line. Based on projected capacity, the combined entity is expected to have a 12.4% share of the worldwide LED chip market. Taiwan based LED producers and packagers have struggled competing with Chinese suppliers, yet these companies have been investing in R&D oriented toward mini-LEDs and microLEDs, to promote growth and price premiums to generic LED BLUs. Epistar had increased its capital expenditure to TWD 6 billion (US$ 202.90 million), of which more than 80% will be used to expand Mini LED capacity. However, for Epistar whose current capitalization is TWD 10.9 billion (US$ 368.60 million), the increased capital expenditure is quite a risky decision. Now that Epistar and Lextar jointly formed a new holding company, the big investment can be shared by both parties and become a release for Epistar. As for Lextar an AUO group member, working together with Epistar via the new holding company helps to alleviate competition and cut off double investment in new technology. In addition, the mother company AUO could gain entry to the Apple supply chain.
Both companies have been struggling for some time and mini/micro LED and will not ‘save’ the LED industry, as it will represent a small part of LED production for a long time and Chinese LED producers are already competing on the same playing field. Rumors of Apple’s release of several Mini LED backlight technology adopted products including a 12.9-inch iPad Pro, a 14.1-inch and 16-inch MacBook Pro in 2020 and 2021 have been going on since last year. Epistar, the Taiwan company focusing on Mini LED technology in recent years, is believed to be a major supplier of Apple’s Mini LED products but the volume generated by these products would hardly make a dent in overall LED production.
June 21, 2020
Epistar and Lextar plan to merge into an as yet unnamed entity. After share conversion, the new holding company is expected to have a capitalization of TWD 6.8 billion (US$ 220.83 million), which is believed to gain more financial flexibility and customer breadth to draw more capital. The concept is to capture the strengths of Epistar which is the production of LED chip level product, and that of Lextar, with LED packaging and module production capability, so as to avoid the duplication of R&D and provide customers with a vertically integrated line. Based on projected capacity, the combined entity is expected to have a 12.4% share of the worldwide LED chip market. Taiwan based LED producers and packagers have struggled competing with Chinese suppliers, yet these companies have been investing in R&D oriented toward mini-LEDs and microLEDs, to promote growth and price premiums to generic LED BLUs. Epistar had increased its capital expenditure to TWD 6 billion (US$ 202.90 million), of which more than 80% will be used to expand Mini LED capacity. However, for Epistar whose current capitalization is TWD 10.9 billion (US$ 368.60 million), the increased capital expenditure is quite a risky decision. Now that Epistar and Lextar jointly formed a new holding company, the big investment can be shared by both parties and become a release for Epistar. As for Lextar an AUO group member, working together with Epistar via the new holding company helps to alleviate competition and cut off double investment in new technology. In addition, the mother company AUO could gain entry to the Apple supply chain.
Both companies have been struggling for some time and mini/micro LED and will not ‘save’ the LED industry, as it will represent a small part of LED production for a long time and Chinese LED producers are already competing on the same playing field. Rumors of Apple’s release of several Mini LED backlight technology adopted products including a 12.9-inch iPad Pro, a 14.1-inch and 16-inch MacBook Pro in 2020 and 2021 have been going on since last year. Epistar, the Taiwan company focusing on Mini LED technology in recent years, is believed to be a major supplier of Apple’s Mini LED products but the volume generated by these products would hardly make a dent in overall LED production.
|
Contact Us
|
Barry Young
|