Sino-American Silicon Products Inc’s (SAS, 中美晶) equity investment in Advanced Wireless Semiconductor Co (AWSC, 宏捷科技) means that their joint exploration of a next-generation compound semiconductor would likely prove positive for the firms in the long term, an analyst said.
The companies on Thursday last week announced that SAS would subscribe to all 45 million shares in AWSC’s private placement for NT$3.497 billion (US$118.5 million).
After the purchase, SAS would own a 22.53 percent stake in AWSC and become its largest shareholder.
AWSC is a gallium arsenide foundry service company and has been testing gallium nitride (GaN) — a next-generation compound — while solar wafer maker SAS’ semiconductor subsidiary GlobalWafers Inc (環球晶圓) is an upstream wafer supplier that has been using GaN in silicon carbide development.
This deal demonstrates potential synergy between the firms by complementing upstream and downstream materials, the companies said.
“By forming a vertical strategic alliance, the companies expect to collaborate in developing GaN products to quickly supply the key components of 5G, electric vehicles and other high-frequency and high-power products required for the next wave of industry, and construct a competitive compound semiconductor industry chain in Taiwan, as well as expand operation scale and improve operational performance,” the companies said in a joint statement.
Sino-American has in the past few years increasingly shifted its focus to GlobalWafers, which in the second quarter accounted for 91.1 percent of its revenue, while reducing its solar energy business, which contributed just 8.9 percent to its overall revenue last quarter, Jih Sun Securities Investment Consulting Co (日盛投顧) analyst Daniel Tsai (蔡志昇) said in a note on Friday.
SAS also has other reinvestments, such as a 41.93 percent stake in sapphire substrate maker Crystalwise Technology Inc (兆遠電子), a 30.93 percent interest in Taiwan Speciality Chemicals Corp (台特化) and 19.07 percent in automotive electronic diode supplier Actron Technology Corp (朋程科技), Tsai said.
With SAS’ investment, Advanced Wireless Semiconductor plans to fund its capital expenditure and establish a unique market position, he said.
“Although the benefits of the cooperation between the firms still need time to materialize, AWSC has benefited from industry trends, such as 5G and Wi-Fi 6, and its long-term prospects are trending upward, therefore SAS’ subscription to AWSC shares through a private placement is quite favorable,” Tsai said.
The companies are expected to start small-scale production of GaN products as soon as the end of next year, he said.
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