TCL China Star Buys Majority Stake in LED Chips Maker Zhaoyuan Optoelectronics for USD69.7 Million

(Yicai) Dec. 29 -- TCL China Star Optoelectronics Technology, a leading maker of liquid crystal displays, has acquired a controlling stake in Zhaoyuan Optoelectronics for CNY490 million (USD69.7 million), entering the light-emitting diode chip sector.TCL CSOT bought an 80 percent stake in Zhaoyuan through the Fujian Provincial Equity Exchange Center on Nov. 28, its parent company TCL Technology announced on Dec. 26. The transaction also included CNY1.8 billion (USD256.1 million) in debt claims as of March 31.Zhaoyuan reported a net loss of CNY300 million in the first 10 months of this year on revenue of CNY710 million, with total net assets of negative CNY1 billion as of the end of October. Its loss topped CNY389 million last year, while its income reached CNY888 million.The acquisition aims to establish vertical integration across the complete supply chain from LED chips to display modules, building an autonomous and controllable supply chain system, Huizhou-based TCL Technology said.Zhaoyuan has LED chip production lines and substantial capacity, having achieved industry-leading levels in high-value segments including backlighting, Mini LED direct displays, and car lighting. Its losses primarily stemmed from suboptimal product structure, resulting in low gross margins.TCL CSOT will improve profitability through tech enablement and customer introduction following the acquisition, accelerating the industrialization of Mini and Micro LED advanced display technologies in televisions, commercial large screens, car displays, and others.Behind this acquisition lies the rapid growth of the Mini LED TV market, with relevant global shipments expected to surge 58 percent to 12.4 million units this year from 2024, despite overall TV shipments falling 0.7 percent to 206 million units, according to data from market researchers Runto.For the Chinese market, Mini LED TV shipments likely soared 93 percent to 8 million units, taking a 24 percent market share and becoming the mainstream product in the mid-to-high-end TV segment. In addition, Micro LED chip tech is particularly critical to success amid growing competition for next-generation Micro LED displays.TCL CSOT previously set up Chipinking with Sanan Optoelectronics in Xiamen, with the joint venture building a Micro LED pilot production line, analysts pointed out. By acquiring Zhaoyuan, it will achieve full supply chain integration for Micro LED and secure greater initiative in the new round of display tech competition, they added.BOE Technology Group, another major Chinese manufacturer of liquid crystal displays, took control of HC SemiTek in 2023 and invested in a Zhuhai MLED production line last year, while Hisense Visual Technology pioneered the launch of RGB Mini LED TVs after buying Changelight.Shares of TCL Technology [SHE: 000100] rose 1.1 percent to CNY4.49 (64 US cents) as of 1.40 p.m. in Shenzhen today.Editor: Martin Kadiev