Lat­tice Power hunts for over­seas M&A

China Daily (Hong Kong) - - BUSINESS - By JING SHUIYU in Bei­jing and WANG JIAN in Nan­chang

A ma­jor Chi­nese chip­maker is hunt­ing for over­seas ac­qui­si­tions in the LED sec­tor as it bids to ex­pand glob­ally.

The head of Chi­nese Lat­tice Power Corp con­firmed the group is look­ing to buy for­eign com­pa­nies in­volved in the light-emit­ting diode, or LED, in­dus­try.

This is the semi­con­duc­tor tech­nol­ogy be­hind lights in cell phones, tablets, PCs and tele­vi­sions, as well as flash­lights, car head­lights and traf­fic sig­nals.

Wang Min, chief ex­ec­u­tive of­fi­cer of Lat­tice Power, said it had a bil­lion­dol­lar war chest when it came to ac­qui­si­tions.

“We are look­ing at po­ten­tially huge mar­kets abroad, as well as for­eign tal­ent and tech­nolo­gies,” Wang said.

Lat­tice Power tried to buy Lu­mileds, the United States-based sub­sidiary of Philips NV two years ago. But the bid to take over one of the tech­nol­ogy gi­ant’s crown jew­els failed.

Founded in 2006, the group based in Nan­chang, Jiangxi prov­ince, has a reg­is­tered cap­i­tal of $123 mil­lion and more than 200 patents, in­clud­ing those for sil­i­con sub­strate-based LED chips.

In­deed, this move into in­no­va­tion is all part of the coun­try’s plan for com­pa­nies to ex­pand their tech­nol­ogy bases.

Part of that is to en­cour­age more merg­ers and ac­qui­si­tions, and to “push for con­cen­trated and dif­fer­en­ti­ated de­vel­op­ment” in the in­dus­try.

By 2020, the LED sec­tor in China is ex­pected to gen­er­ate 1 tril­lion yuan ($148.6 bil­lion), so the stakes are high for tech com­pa­nies.

Lat­tice Power has be­come a ma­jor player here with rev­enue from its main LED busi­ness reach­ing 861 mil­lion yuan in 2016, up 13.7 per­cent year-on-year.

“The low-cost and eas­ily scal­able tech­nol­ogy has been ap­plied to mil­lions of house­holds,” CEO Wang said.

To main­tain earn­ings growth, the com­pany plans to raise $80 mil­lion this year to help fi­nance three new pro­duc­tion lines.

“By then, pro­duc­tion ca­pac­ity of LED chips will grow by 50 per­cent,” Wang said.

Wu Shen­jun, man­ag­ing di­rec­tor of GSR Ven­tures, said the sil­i­con sub­strate­based LED tech­nol­ogy is “an ideal choice” for next gen­er­a­tion in­no­va­tion.

In 2015, the Jiangxi gov­ern­ment wheeled out a plan to es­tab­lish Nan­chang Op­tics Val­ley, a Sil­i­con Val­leystyle clus­ter of LED com­pa­nies.

Since then, Lat­tice Power has launched an in­ter­na­tional part­ner­ship drive to at­tract more en­ter­prises with LED ex­per­tise to set up work­shop at Op­tics Val­ley.

“The goal is to build an in­dus­try clus­ter, con­sist­ing of about 100 com­pa­nies, rang­ing from up­stream to down­stream of the LED chain,” Wang said.

“By shar­ing re­sources, firms can lower costs in re­search and de­vel­op­ment, raw ma­te­ri­als, lo­gis­tics, equip­ment and la­bor,” he added.

Zou Shuo con­trib­uted to the story.

Con­tact the writ­ers at jing­shuiyu@chi­nadaily.com.cn

XIN­HUA

The LED pro­duc­tion line of Lat­tice Power Corp in Nan­chang, Jiangxi prov­ince.

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