Major News: BOE Plans to Acquire Stake in Huacan Optoelectronics, Becoming the Largest Shareholder

Data shows that BOE is a global leader in the semiconductor display field and a globally innovative enterprise in the IoT field. Its main businesses include semiconductor display devices, IoT innovation business, sensors and solutions, MLED, smart healthcare engineering, etc. In 2021, it achieved revenue of approximately RMB 219.31 billion and net profit of approximately RMB 25.831 billion. Its leading position in semiconductor displays continued to be consolidated, with the market share of sales for five major mainstream products—smartphone LCD screens, tablet displays, laptop displays, monitor displays, and TV displays—remaining firmly ranked first globally.

(Image source: BOE)

HC Semitek is a global leading supplier of LED chips and advanced semiconductor solutions. Its main business includes the research, development, production, and sales of LED chips, LED epitaxial wafers, sapphire substrates, and GaN power electronic devices. Its products are widely used in display backlights and are an important component of BOE's display products, positioning HC Semitek as an upstream supplier to BOE.

It is reported that MLED is a new display technology attracting significant industry attention. In recent years, it has shown strong momentum in areas such as backlighting and large-format outdoor displays, with broad growth potential for the future. From an overall industry perspective, the three core technologies are Mini/Micro LED Epitaxy/chip technology, active-matrix driver backplane technology, and high-speed/mass transfer technology. These play a decisive role in optimizing key processes and iterating product development. Mastering these three core technologies is crucial for companies to establish technical competitive barriers.

Through this transaction, BOE can rapidly acquire key LED chip technologies, integrate them with its active-matrix driving and high-speed transfer technologies to achieve synergy, unleash the "1+1>2" fusion advantage of its two core technologies—MLED display panels and chips—and thereby establish a complete MLED technology system and ecosystem, continuously consolidating and enhancing BOE's leading position in the display industry, especially in the Mini/Micro LED field.

Where is this specifically reflected? BOE disclosed that the necessity of this transaction is as follows: First, to implement BOE's development strategy, rapidly strengthen the sustainable competitive advantage of the MLED business, and consolidate and enhance BOE's global competitive position. Second, to rapidly supplement key LED chip technologies, integrate and synergize with BOE's active matrix driving and high-speed transfer technologies, build a complete MLED technology system, and create core capabilities for first-class technical products. Third, to integrate core links of the industry chain, connect the full industry chain layout including substrate, epitaxy, chips, packaging, and applications, and significantly strengthen industry influence. Fourth, to efficiently integrate the advantageous industrial resources of both parties, boost the company in building a large IoT innovation "ecosystem," and drive BOE's continuous high-quality development.

According to the announcement, after the successful integration of BOE and Huacan Optoelectronics through this transaction, both parties can mutually empower each other in many aspects such as technology products, operational management, and market expansion, effectively promoting and enhancing business competitiveness:

• In terms of technical products, HC Semitek is positioned upstream in the industry chain. It is a core segment that BOE needs to integrate for its MLED business, ensuring the supply of MLED chips as key materials for the company, while also collaborating to achieve product iteration and upgrades;

• In terms of market expansion, BOE's MLED business is positioned in the mid-to-downstream of the industry chain. It serves as the company's development platform in the field of Mini/Micro LED novel displays and can provide a broad outlet for Huacan Optoelectronics' small-pitch LED chip products in the future.

Both parties are highly aligned in terms of industry layout and future planning . Future integrated development will enable mutual empowerment, leveraging BOE's broad semiconductor display industry platform to achieve high-quality, rapid growth post-integration. Therefore, this project is expected to yield strong economic benefits.

HC Semitek also released several announcements, indicating that the company plans to issue shares to specific investors. According to the disclosure, RMB 1.75 billion of the funds raised will be invested in the Micro LED wafer manufacturing and packaging testing base project, while another RMB 333 million will be used to supplement working capital.

In recent years, HC Semitek has continuously strategically adjusted and upgraded its product structure, focusing on mid-to-high-end products and accelerating its layout in the market for new full-spectrum LED high-performance epitaxy and chips, thereby maintaining and expanding its core competitiveness and leading position in the LED field. In addition, the company continues to improve its R&D layout for next-generation technologies and new products, strengthening reserves in frontier technologies such as Mini/Micro LED and compound semiconductor power devices.

HC Semitek stated that, following this issuance, HC Semitek will become a subsidiary controlled by BOE, which will facilitate enhanced coordination of upstream and downstream resources and industrial synergy between both parties, enrich the product portfolio, enhance product competitiveness, expand application markets, and jointly develop frontier Mini/Micro LED technologies and products. Furthermore, HC Semitek will fully leverage BOE's financial and resource advantages to effectively integrate resources, form complementary strengths with BOE, and promote the company's long-term, sustainable, and healthy development.