LED chipmaker Lextar Electronics Corp’s (隆達電子) board has agreed to sell a 13 percent stake to US company Cree Inc for US$83 million in a joint effort to build a stronghold in the fast-growing LED lighting market, the Taiwanese firm said yesterday.
Lextar said Cree has offered to buy 83 million new common shares of the Hsinchu-based company at NT$30 per share, representing a 1.45 percent premium compared with Lextar’s closing price of NT$28.55 on Tuesday.
The deal will make the US firm the second-biggest stakeholder in the LED chipmaker after AU Optronics Corp (友達光電).
Lextar and Cree are also to enter into a long-term LED chip supply partnership, as well as into an agreement for some of Cree’s intellectual property in LED chips and components, according to a joint statement.
“The collaboration with Cree will help Lextar develop its efforts to tap the LED lighting sector, as well as have stable chips export figures,” Lextar chief financial executive Chang Bo-yi (張博儀) said in a statement filed with the Taiwan Stock Exchange before the stock market opened yesterday.
The deal has been approved by the companies’ boards and is to be finalized by the end of the year, subject to the approval of Lextar’s shareholders at an extraordinary shareholders’ meeting set for Oct. 14, as well as a review by the Investment Committee, Lextar said.
Market researcher TrendForce Corp (集邦科技) said the partnership came as a surprise, but that the strategic pairing would help Cree improve its cost structure and thereby secure its market share.
For Lextar, the investment would help it obtain “the capital to expand capacity and to secure an export market,” TrendForce analyst Roger Chu (儲余超) said in a report released yesterday.
Lextar makes LED chips, light sources, light modules and provides LED packaging services. The company has long been an original-equipment manufacturing service provider for Cree and Osram GmbH. It operates as many as 80 metal organic chemical vapor deposition machines to make LEDs, according to TrendForce.
According to its Web site, Cree is a market leader in lighting-class LEDs, LED lighting and semiconductor solutions for wireless and power applications.
Yuanta Investment Consulting (元大投顧) analyst Andrew Chen (陳治宇) said the tie-up would help North Carolina-based Cree drive down the prices of its LED lighting products rapidly to boost the adoption of energy-saving lighting equipment, while Lextar would benefit via a growth in shipments.
“As Cree becomes a key LED lighting customer for Lextar, this [deal] should help drive sales growth [for Lextar],” Chen said in a research note yesterday.
In the first seven months of the year, the chipmaker posted accumulated revenue of NT$8.43 billion (US$281 million), a rise of 4.92 percent from a year earlier, company data showed.
However, Chen warned that Lextar could lose orders from its other customers, saying they might choose to use the firm “less” for strategic reasons.
“The impact of the agreement will need to be monitored,” he said.
Lextar shares rallied 6.83 percent to NT$30.5 yesterday, outperforming the TAIEX’s 0.98 percent gain.
The US dollar was trading at NT$29.7 at 10am today on the Taipei Foreign Exchange, as the New Taiwan dollar gained NT$1.364 from the previous close last week. The NT dollar continued to rise today, after surging 3.07 percent on Friday. After opening at NT$30.91, the NT dollar gained more than NT$1 in just 15 minutes, briefly passing the NT$30 mark. Before the US Department of the Treasury's semi-annual currency report came out, expectations that the NT dollar would keep rising were already building. The NT dollar on Friday closed at NT$31.064, up by NT$0.953 — a 3.07 percent single-day gain. Today,
‘SHORT TERM’: The local currency would likely remain strong in the near term, driven by anticipated US trade pressure, capital inflows and expectations of a US Fed rate cut The US dollar is expected to fall below NT$30 in the near term, as traders anticipate increased pressure from Washington for Taiwan to allow the New Taiwan dollar to appreciate, Cathay United Bank (國泰世華銀行) chief economist Lin Chi-chao (林啟超) said. Following a sharp drop in the greenback against the NT dollar on Friday, Lin told the Central News Agency that the local currency is likely to remain strong in the short term, driven in part by market psychology surrounding anticipated US policy pressure. On Friday, the US dollar fell NT$0.953, or 3.07 percent, closing at NT$31.064 — its lowest level since Jan.
Hong Kong authorities ramped up sales of the local dollar as the greenback’s slide threatened the foreign-exchange peg. The Hong Kong Monetary Authority (HKMA) sold a record HK$60.5 billion (US$7.8 billion) of the city’s currency, according to an alert sent on its Bloomberg page yesterday in Asia, after it tested the upper end of its trading band. That added to the HK$56.1 billion of sales versus the greenback since Friday. The rapid intervention signals efforts from the city’s authorities to limit the local currency’s moves within its HK$7.75 to HK$7.85 per US dollar trading band. Heavy sales of the local dollar by
The Financial Supervisory Commission (FSC) yesterday met with some of the nation’s largest insurance companies as a skyrocketing New Taiwan dollar piles pressure on their hundreds of billions of dollars in US bond investments. The commission has asked some life insurance firms, among the biggest Asian holders of US debt, to discuss how the rapidly strengthening NT dollar has impacted their operations, people familiar with the matter said. The meeting took place as the NT dollar jumped as much as 5 percent yesterday, its biggest intraday gain in more than three decades. The local currency surged as exporters rushed to
RSS