Local semiconductor firm GCS Holdings Inc (環宇通訊) yesterday said its board has dropped a US$226 million deal to sell itself to China’s Sanan Optoelectronics Co (三安光電) after US regulatory authorities blocked the transaction.
Instead, GCS signed a memorandum of understanding with the Chinese LED chipmaker to form a new joint venture, with the aim of building a 6-inch wafer plant.
GCS said it has been seeking partners to build advanced chip capacities over the past year in order to explore new business opportunities and to diversify its product portfolios.
The joint venture is to help the firm reach this goal, it said.
“The new joint venture will make chips, such as radio frequency ICs [integrated circuits] and power management ICs used in consumer electronics and mobile devices,” GCS said in a statement filed with the Taiwan Stock Exchange yesterday.
Radio frequency ICs made up 34 percent of the firm’s total revenue of NT$464 million (US$14.66 million) in the first quarter of this year.
As discussions are still in the initial stages, GCS said it does not yet have financial details, such as the new firm’s share capital and how many shares each side will hold.
GCS said its board yesterday approved scrapping the acquisition, as the deal was rejected by the Committee on Foreign Investment in the US (CFIUS) due to unspecified concerns.
Since the deal was announced in March, speculation had arisen that Sanan’s takeover bid would face close scrutiny by CFIUS, because some GCS products with military applications are shipped to clients in the US.
GCS did not comment on the issue.
The company said it has signed an agreement to terminate the deal with Sanan’s fully-owned investment arm, SAIC Acquisition Inc.
SAIC originally planned to buy all 58 million shares of GCS.
GCS, registered in the Cayman Islands, offers foundry services for gallium arsenide-based and gallium nitride-based radio frequency ICs, wireless devices, power electronics and optoelectronics, in addition to gallium arsenide-based optical wafers and chips.
Trading of GCS shares has been suspended due to the cancelation of the deal.
The company is scheduled to release quarterly earnings at an investors’ conference today.
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