LED chip supplier Formosa Epitaxy Inc (ForEpi, 璨圓光電) yesterday won the government’s approval to sell a 19.9 percent stake to Chinese LED epitaxy maker Sanan Optoelectronics Co (三安光電) after more than seven months under the regulatory review.
However, the conditional permission by the Ministry of Economic Affairs restricts the Taiwanese firm from “transferring patents, talents, management rights or technologies” to its Chinese partner, according to a statement released by the ministry.
As it is the first investment case in which Chinese firms are allowed to invest in Taiwan’s listed companies, the ministry said it had conducted rigorous evaluations for ForEpi’s application.
“The Investment Commission has specified certain sectors in manufacturing that Chinese firms can invest in, but the investors will have to prove their investment plans are not aimed at taking over Taiwanese firms, before they are to be given approval from the ministry,” the statement said.
With Chinese funds, Taiwanese firms will be able to expand their businesses, strengthen collaboration with Chinese business partners, enhance competitiveness in the global market and help create job opportunities in the country, the ministry said.
In February, ForEpi applied for government approval for its plan to sell 120 million new shares at NT$19.6 each to Sanan via a private placement to raise NT$2.35 billion (US$78.56 million), which will give Sanan a 19.9 percent stake in ForEpi.
“Taiwan’s LED industry has a complete supply chain, skilled technologies backed by patents, and rich talent resources, but faces difficulties when trying to improve profitability because of the lack of capital,” the ministry said.
“The ForEpi-Sanan investment case will help ForEpi increase its capital, expand the scale of the business, create job opportunities, and also strengthen its position in the global market,” it added.
ForEpi spokesperson Grath Fu (傅珍珍) said the ministry will send a letter to Sanan to inform the company of the government’s official approval for its investment plan.
As required by law, Sanan will have to purchase ForEpi’s shares within 15 days, in accordance with its agreement with ForEpi, Fu said by telephone yesterday.
Meanwhile, Southern Taiwan Science Park (STSP) yesterday confirmed that Ubilux Optoelectronics Corp (晶發光電), an LED arm of Powerchip Technology Corp (力晶), had closed its business and laid off staff.
According to reports by Chinese-language United Daily, Ubilux laid off a total of 177 employees this month after struggling to survive in the competitive LED market.
Ubilux’s retreat from the LED market follows LED chip manufacturer Chi Mei Lighting Technology Corp’s (奇力光電) shut-down earlier this month.