Solar company Sino-American Silicon Products Inc’s (SAS, 中美晶) shares rallied 6.75 percent in early trading yesterday after the company announced its NT$3.5 billion (US$118.59 million) equity investment in compound semiconductor supplier Advanced Wireless Semiconductor Co (AWSC, 宏捷科).
The investment gives SAS 45 million new shares of AWSC, or a 22.5 percent stake, making it the biggest shareholder of the Tainan-based semiconductor company.
SAS shares closed up 0.7 percent at NT$100, retreating from gains in morning trade. AWSC shares jumped 1.03 percent to close at NT$98.50.
“This strategic move creates a win-win situation for both companies,” SAS chairperson Doris Hsu (徐秀蘭) told an investor teleconference.
VERTICAL ALLIANCE
By forming a vertical strategic alliance, AWSC and SAS expect to collaborate in developing gallium nitride (GaN) products through SAS’ subsidiary GlobalWafers Co (環球晶圓) to quickly supply key components used in 5G devices, electric vehicles and other high-frequency and high-power products, SAS said.
GlobalWafers, a 50 percent-owned silicon wafer manufacturing arm of SAS, has been investing in developing compound semiconductor wafers, including GaN and silicon carbide, over the past seven to eight years, said Hsu, who is also the chairwoman of GlobalWafers.
Compound semiconductor wafers make up less than 1 percent of Global Wafers’ annual revenue, Hsu said, adding that she does not expect revenue from this segment to increase overnight.
GaN is a new-generation semiconductor material and GaN transistors have emerged as a high-performance alternative to silicon-based transistors, with major benefits in power efficiency. With a wider band gap, GaN can also sustain higher voltages and higher temperatures than silicon.
PANDEMIC WOES
Hsu said that the COVID-19 pandemic had dealt a blow to the company’s solar business, as supply chain disruptions, lockdowns and quarantine restrictions have caused delays in solar installations.
The business outlook was dimmed by supply constraints of polysilicon after a major Chinese production line was destroyed by a massive explosion earlier this year, Hsu said.
The incident has led to a spike in polysilicon prices, which have soared 30 to 40 percent over the past two to three weeks, Hsu said.
“We were expecting a good recovery in the third quarter. And we did see some recovery in orders in June,” Hsu said. “It is very difficult to give a clear outlook for the second half.”
SAS reported a record-high second-quarter net profit of NT$1.52 billion, compared with a NT$2.82 billion loss in the same period last year, due to a substantial reliability provision stemming from a polysilicon supply contract.
Net profit in the first half was NT$2.9 billion, reversing a loss of NT$443.57 million during the same period last year. Earnings per share rose to NT$4.96, compared with a loss of NT$0.76.
Revenue shrank 11.24 percent year-on-year to NT$30.32 billion in the first half, from NT$34.16 billion.
About 90 percent of SAS’ revenue came from GlobalWafers.
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