$25 million! This company acquires a 21.86% stake in a leading third-generation semiconductor enterprise

On the evening of August 24, Hongguang Lighting (06908.HK) announced that its wholly-owned subsidiary, Fast Semi Holding Ltd., has invested in VisIC Technologies Limited, one of the leading companies in third-generation GaN devices in the semiconductor field.

Under the share purchase agreement, the subsidiary agreed to subscribe for 1,749,961 shares of VisIC Technologies Limited, representing approximately 21.86% of VisIC's enlarged issued share capital, for a consideration of approximately USD 25 million. In accordance with the terms of the share purchase agreement, the investment was successfully completed on August 23, 2021.

GaN is often referred to as one of the representatives of third-generation semiconductor materials. Compared to previous-generation semiconductor materials, GaN features a wider bandgap, higher breakdown voltage, improved power conversion efficiency, and stronger thermal stability at high temperatures. Due to high demand in automotive, industrial, and telecommunications applications, the third-generation semiconductor division may enter a phase of rapid growth. Specifically, in 2021, annual revenue for GaN radio frequency ("RF") devices is expected to reach approximately USD 680 million, a Year-on-year (YoY) increase of about 30.8%, while revenue for GaN power components is expected to reach approximately USD 61 million, a Year-on-year (YoY) increase of about 90.6%. The significant growth in GaN power component revenue is mainly attributed to smartphone manufacturers launching GaN-based fast chargers.

VisIC Technologies Limited is one of the leading companies in the semiconductor field for third-generation GaN devices. It is a company incorporated under the laws of the State of Israel, primarily engaged in the development of GaN-related products, including high-power transistors and modules. The company has in-depth knowledge of GaN technology and decades of experience with GaN products. It has filed several key Patents related to GaN technology, and its technologies and products are widely applicable in fields such as power conversion, fast-charging products, and power components.

Hongguang Lighting is primarily engaged in the design, development, manufacturing, subcontracting services, and sales of semiconductor products, including LED beads, LED lighting products, and fast battery charging products. It is committed to the research and development of next-generation LED technology, namely Mini LED relying on GaN substrate technology. Leveraging its industry expertise in semiconductor manufacturing, the Group has expanded its business to various types of semiconductors, including GaN-related products.

The Board of Directors of Hongguang Lighting believes that by investing in VisIC, the Group will be able to leverage VisIC's extensive operational scale, rich experience, resources, and expertise to further develop and explore the application of its expertise in the LED and semiconductor industries in GaN-related products.

Furthermore, upon completion of the strategic investment, Hongguang and VisIC will generate synergies by leveraging their respective strengths and further jointly developing GaN-related chips and products. Hongguang will enter the design domain of Chinese electric vehicle enterprises by leveraging VisIC's product portfolio.

Following the Acquisition, Hongguang Lighting will become a rare GaN design target listed on both the Hong Kong and A-share markets.