LED stocks tumbled yesterday amid investor concern over the potentially negative impact of Royal Philips Electronics NV’s sale of its lighting subsidiary to a Chinese firm.
Shares of Epistar Corp (晶元光電), the nation’s top LED chipmaker, plunged 6.94 percent to close at NT$46.9, the lowest level since November 2012, while those of Lextar Electronics Corp (隆達電子) fell 4.26 percent to NT$27 on the Taiwan Stock Exchange. The TAIEX was down 0.82 percent.
Everlight Electronics Co (億光), one of the nation’s leading LED lighting and product suppliers, also saw it shares decline 1.13 percent to NT$70.1, while Delta Electronics Inc (台達電) slid 1.27 percent to NT$195. Opto Tech Corp (光磊科技) fell 1.1 percent to NT$13.45.
On Tuesday, the Dutch electronics group said it was selling an 80.1 percent stake in its lighting components unit Lumileds and automotive-lighting business to a consortium led by GO Scale Capital for US$2.8 billion. Philips is retaining a 19.9 percent interest in the unit.
GO Scale Capital is sponsored mainly by China-based GSR Ventures (金沙江創投) and Oak Investment Partners.
The news sparked concern in the local stock market as Lumileds is one of Epistar’s biggest customers.
“Among Taiwanese LED manufacturers, Epistar and Lextar have reached patent license agreements with Philips, but the Lumileds sale would provide Chinese LED firms access to patent rights and help them go global,” SinoPac Securities Co (永豐金證券) said in a note.
“However, Taiwanese LED companies still have an upper hand over Chinese firms because Taiwanese companies have long-term relationships with international LED companies,” SinoPac added.
LEDinside research director Roger Chu (儲于超) agreed, saying that since Lumileds is one of the five major intellectual property patents holders in the industry, Chinese LED manufacturers have a chance to resolve patent issues in the future.
“The acquisition would provide GO Scale Capital an additional 600 patents from Philips. With Chinese investors having a majority stake in Lumileds, Chinese LED manufacturers will be able to overcome patent barriers in foreign markets,” Chu said in a statement.
GO Scale Capital has made a series of investments in various Chinese companies in the LED supply chain, including LED wafer company Lattice Power Corp (晶能光電), packaging company Shine On (易美芯光) and luminaries firm SunSun Lighting (上舜照明), Chu said.
“Once GO Scale Capital has the controlling stake in Lumileds, it may consolidate all its industry-related interests, inserting its new acquisition into the LED supply chain,” Chu said.
UBS Securities Pte Ltd believes GO Scale Capital’s potential investments in other LED companies could gain more intellectual property licenses and create rising competition for other LED vendors.
“We see limited near-term impact on Taiwan LED firms from potential order shift post the deal. Nonetheless, a key question post the deal is whether Chinese LED companies will get easier access to the Lumileds patents,” UBS analyst Samson Hung (洪希民) said in a note.
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