San’an Plans to Raise Up to 7.9 Billion Yuan for Mini/Micro LED Investments

Despite being a major target of LED and display companies, Mini LED and Micro LED have yet to mature, thereby requiring funding supports. On September 29, San’an Optoelectronics announced a plan to raise 7.9 billion yuan ($1.22 billion) through private placement. The raised capital will be put into the industrialization projects of Mini/Micro LED displays at the company’s plant in Hubei, China and used to supplement circulating capital.

San’an Increases Investments in Mini/Micro LED Projects to Target at High-end Markets

Due to overcapacity, fierce competition and reduced profitability in the traditional LED markets, LED chip enterprises have started to develop products for niche markets in recent years, including San’an. Since 2020, the LED manufacturer has made several breakthroughs in product mix adjustment, after which the percentages of high-end products (i.e., Mini/Micro LEDs, UV/IR LEDs, automotive LEDs, horticulture LEDs and compound semiconductors) have substantially increased.

Specifically, Mini/Micro LED applications have expanded from the original TV market to tablet, notebook and vehicle mounted display markets. As technologies get more mature with reduced costs in the future, Mini/Micro LED will become one of the crucial businesses helping San’an to overcome sales bottlenecks.

San’an has signed a long-term supply contract with Samsung and become a key supplier of Mini/Micro LED chips for the South Korean conglomerate. When related production capacity begins to expand in the future, San’an will continue providing chips for Mini/Micro LED end product manufacturers like Samsung and TCL.

The production capacity of San’an’s semiconductor plant (established through fundraising projects) in Quanzhou has been gradually realized. Regarding the company’s industrialization project of Mini/Micro display chips in Hubei, the production base has been partially put into production.

On the evening of September 29, San’an announced a plan to increase investments in the Hubei project.

According to the announcement, the LED maker decided to raise up to 7.9 billion yuan through private placement. The raised capital (excluding the issuance fee) will be put into the Mini/Micro display industrialization project and circulating capital of Hubei San'an Optoelectronics Co., Ltd.

San’an considers the Mini/Micro LED display industrialization project at its Hubei subsidiary a vital measure for the company to upgrade its product mix. The LED maker intends to make full use of its technical advantages in the compound semiconductor sector and abundant Mini/Micro LED development experience. The firm can then seize the opportunity to rapidly grow, expand its production capacity and percentages of Mini/Micro LED products with cost advantages and constantly increase its market share and profitability. The Mini/Micro LED project helps San’an to ensure product supply in the downstream market and safeguard its customers’ supply chains. In this way, San’an can strengthen its overall competitiveness and secure the leading position in the compound semiconductor sector.

Regarding production capacity, the Hubei project aims to construct a research, development and production base of three major products series, namely GaN Mini/Micro LED chips, GaAs Mini/Micro LED chips and 4K display packages. After the base is put into production, San’an will have extra annual production capacity of 1.61 million GaN chips, 750,000 GaAs chips (four inch equiv.) and packages for 84,000 4K displays.

Mini/Micro LED Will Set Critical Trends of LED Technological Development in the Next Generation

As an emerging sector associated with energy conservation and environmental protection, advanced materials and renewable energy, the LED industry is highly valued by the Chinese government with numerous policies and plans being proposed for industrial development. Among those that have been enacted (i.e., T he 13th Five-Year Plan [National Plan for Strategic Emerging Industries, National Plan for Scientific and Technological Innovation, Plan for the Development of Energy Conservation and Environmental Protection Industries, Development Plan for the Semiconductor Lighting Industry], Guidelines on the Development of Critical Generic Technologies for Industries [2017] and Made in China 2025), LED-related research and development, critical materials, production equipment, promotions and applications are prioritized, demonstrating that the industry has received solid support by national policies in China.

After rapid growth between 2012 and 2018, the LED industry is now faced with maturity of conventional manufacturing technologies and supply–demand disequilibrium in low-end markets. The industry is undergoing structural adjustment, where market concentration enhancement and structural upgrading and transformation have moved into the spotlight. Mini/Micro LED, as a core emerging display technology, will become the key to LED technological development in the next generation.

With years of development, Mini/Micro LED applications have witnessed rising penetration from chip manufacturing, packaging to end products, prompting LED and panel companies to accelerate strategic development in this emerging market.

According to research company TrendForce, the use of Mini/Micro LED is estimated to soar in 2022. Specifically, solutions for Mini LED backlights will shift from passive matrix to active matrix addressing scheme. In comparison, TVs will become one of the target applications of Micro LED, signifying the technology’s extension from commercial to home use markets.

Leading companies have also launched a series of Mini/Micro LED end products, such as Skyworth, Huawei, Apple, Samsung, Philips, TCL, Lenovo, Xiaomi, Konka, Hisense, LG, Ledman and Leyard.

Several companies have accomplished related projects. For example, BOE’s subsidiary Jingxin Technology announced on September 27 that its first COG P0.9 flagship project under the MLED business was successfully produced and delivered. Guangdong-based China Everbright Group invested 10 billion yuan ($1.55 billion) in Mini/Micro LED projects, which are expected to be launched in January 2022 and put into production by November 2024. Changelight’s private placement proposal worth 1.5 billion yuan ($232.5 million) was approved on August 18. Specifically, the company plans to invest 1.15 billion yuan (approx. $178.3 million) in the research, development and production of Mini/Micro LEDs as well as high luminous efficacy LED chips, whereas the remaining 350 million yuan (approx. $54.2 million) will be used to supplement circulating capital. Konka has achieved trial production of Micro LED chips in small batches and that of Mini LED chips in small and medium batches.

Further, Mini/Micro LED has become a major target of businesses seeking diversification and cross-sector cooperation.

Pathfinder (TOREAD), a top outdoor gear China a-share company, announced on the evening of September 21 that it will purchase an 80% stake in Beijing Xinneng Electronic Technology together with Jiaxing Yuanyang Equity Investment and Xiamen Xiyi Equity Investment. In detail, TOREAD will pay 260 million yuan ($40.3 million) to buy a 60% stake, marking the gear maker’s milestone of entering the Mini/Micro LED market.

On the other hand, San’an has established strategic partnerships with TCL and Chengdu Chenxian (joint venture of Visionox) to solve technical difficulties in Micro LED production. Moreover, a joint laboratory built by TCL and Xiaomi was inaugurated on September 29 in Wuhan.

San’an’s Mini/Micro LED private placement project this time will further increase the company’s high-end product percentage and boost its production capacity. In the coming years, the LED manufacturer is likely to benefit from the rapid development of Mini/Micro LED, thereby raising its market standing in the LED industry.

(By Lynn from LEDinside)

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