Business News | Jul 30, 2010

LED chipmaker Epistar to merge with UMC affiliates

After announcing a merger with United Epitaxy Company (UEC) last August and becoming the world`s largest AlGaInP (aluminum gallium indium phosphide) LED supplier, Epistar on September 28 announced it will acquire Epitech Technology and Highlink Technology, two LED affiliates of United Microelectronics Corporation (UMC).

With the official merger to take place on March 1, 2007, Epistar will undergo a share swap with Epitech at a ratio of 1:3.08 and with Highlink at 1:5.5, the LED chipmaker said. After the merger, Epistar will have a NT$5.08 billion paid-in capital, said company president Biing-jye Lee, adding that not only will the maker remain the top AlGaInP LED chipmaker, it will be among the top four gallium nitride (GaN) LED chipmakers worldwide in terms of capacity, with Nichia and Cree also included in the top ranking.

The combined capacity of gallium nitride (GaN) LED chips from Epitech and Highlink is twice that possessed by Epistar, and their client portfolios complement each other - only 1-2 clients among their combined top ten overlap, Lee indicated, adding that Epitech also has strong channel distribution experience in China.

In addition, the combined number of LED patents from the three firms will total more than 800, which will facilitate patent partnerships with international makers, Lee said. Via the share swaps, UMC will also gain shares of Epistar, with the foundry stating it is confident about the potential of the LED industry. Nevertheless, the company said it is still too early to talk about whether it will take on a director position at the LED chipmaker.

UMC now has a 12.55% stake in Epitech and a 30.6% stake in Highlink via affiliated venture capital firms, with the group being now the largest shareholder of Highlink, sources said.