Taiwan's Epistar, Lextar set up holding firm to fight competition as LEDs boom

22, Jun. 2020

Photo by Winston Chen on Unsplash
Photo by Winston Chen on Unsplash

TAIPEI, NNA - Taiwan's major LED epitaxial wafer and chip manufacturer Epistar Corp. and mini-LED maker Lextar Electronics Corp. are setting up a holding company through share conversion in a strategic move to seize opportunities in the booming market for micro and mini LEDs.

Following three months of talks on the proposed merger, the new company will leverage each party’s strengths to form a complete supply chain as Epistar supplies epi-wafer and chips for Lextar to make LED products in the downstream.

“Through the alliance, our main game is to integrate the two firms’ core strengths to differentiate from peers in technologies and solutions and thus increase competitiveness,” Lextar CFO Chang Bo-yi said at a media briefing on Friday.

The collaboration in sharing production capacities will place them in a stronger position to take on competitors in mainland China, he added.

Both firms have to make this decisive move as “mini-LED is about to boom,” said Chang, adding that "we’d like to take the chance to widen the gap with our rivals in the sector."

Although the two companies will be delisted, they will continue to operate as separate companies. The new firm will control Epistar and Lextar as 100 percent owned subsidiaries, with a capital of NT$6.86 billion ($232 million).

The proposed company is expected to obtain approval from a special meeting of shareholders scheduled on Aug. 7, and plans to be listed on the stock exchange on Oct. 20, according to their joint statement.

The conversion is tentatively set at one share of Epistar for 0.5 ordinary shares of the new company, and one share of Lextar for 0.275 ordinary shares.

The holding company aims to grow the existing businesses of Epistar and Lextar significantly and explore investments in advanced technologies for applications including mini/micro-LED displays, intelligent sensing and III-V microelectronics fields.

While the company will strengthen the global competitiveness of both firms, Epistar and Lextar will continue to operate with no impact on their respective customers and employees.

When asked by the media why the partnership is being realized through a controlling company instead of combining them as a single entity, Epistar Vice President Rider Chang said the former approach would allow both companies to operate independently and focus better on their respective expertise.

Their collaboration will integrate their resources, with Epistar focusing on LED upstream and midstream technology with Lextar becoming a client while Lextar will concentrate on downstream technologies with Epistar being one of its strategic suppliers.

Epistar chairman B.J. Lee said in a statement that the market in LED technology in display application has become so competitive that the LED industry now needs more collaboration than ever. The holding company will plan overall operations to leverage the resources effectively and develop a collaboration strategy so that all its subsidiaries can evolve on this new platform.

Apart from mini and micro LEDs, III-V compound semiconductor, a type of alloy containing elements from categories III and V, will also be a key focus for integration in future, said Rider Chang.

Epistar President Patrick Fan said the holding company will not only contribute to the overall supply chain but also accelerate application development in the miniaturization of LEDs to improve the visual quality of displays.

Lextar products have spanned the upstream, midstream and downstream of the industry, said Lextar Chairman and CEO David Su, adding that it has the advantage of retaining downstream customers being close to the market.

As their collaboration deepens, Epistar will become a strategic partner of Lextar’s for LED dies and Lextar will focus on the development of packaging and modular technologies to provide prompt services to worldwide customers. Lextar is a subsidiary of major liquid crystal display panel maker AU Optronics based in Hsinchu Science Park in Taiwan.

The daily operation of the holding company will be coordinated and decided by a steering committee jointly established by both parties.