Apple as Nudge to Epistar and Lextar Merge?

Taiwanese LED chip maker Epistar and Lextar are going to form a new holding company, aiming to intensify its growing momentum in next-gen display technologies Mini LED and Micro LED. LEDinside noticed that Apple, who is reportedly launching Mini LED-based products, could be a nudge that lead to the alliance of Epistar and Lextar.

Rumors of Apple to release several Mini LED backlight technology adopted products including a 12.9-inch iPad Pro, a 14.1-inch and 16-inch MacBook Pro in 2020 and 2021 have been going on since last year. Epistar, the Taiwan company focusing on Mini LED technology in recent years, is believed to be a major supplier of Apple’s Mini LED products.

(Image: Pixabay)

According to the report of TrendForce, 2020 Mini LED Next-Generation Display Technology and Supply Chain Analysis, one 12.9-inch iPad Pro will use up to 10000 units of Mini LED chip as the backlight source. Once the product launched and are mass produced, the demands for Mini LED chip will hike significantly.

In order to take the order from Apple, Epistar had increased its capital expenditure to TWD 6 billion (US$ 202.90 million), among which, more than 80% will be used to expand Mini LED capacity. However, for Epistar whose current capitalization is TWD 10.9 billion (US$ 368.60 million), the increased capital expenditure is quite a risky decision. Now that Epistar and Lextar jointly formed a new holding company, the big investment can be shared by both parties and become a release for Epistar.

As for Lextar who belongs to the AUO group, working together with Epistar via the new holding company helps to alleviate competition and cut off double investment in new technology. In addition, the mother company AUO, who focus on panel production, also gain a possibility to step into the supply chain of Apple.

Moreover, after share conversion, the new holding company is expected to have a capitalization of TWD 6.8 billion (US$ 220.83 million), which is believed to gain more financial flexibility and customer breadth to draw more capital.

Big names such as Apple and Samsung have high expectation on Mini LED and Micro LED and are likely to drive demands for the technologies. For Taiwan-based LED makers who have been suffering from the declining price and severe competition in the industry, Mini LED display technology is their hope to bounce back.

Through the strategic alliance, Epistar and Lextar could share the risk of capacity expansion as well as to attract more investment. Furthermore, they will leverage their expertise to advance technology performance, fighting for a better chance to cut into the supply chain of big names.

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