Interpretation of HDSC’s Integration Plan after the Acquisition of Microchip’s Mobile Touch Control Business

A few days ago HDSC’s subsidiary company Solomon Systech announced a 23 million USD acquisition of Microchip’s mobile touch control business, which has drawn wide attention from the industry. Solomon Systech is an important company in the domestic display drive and touch control field. After this acquisition, the company will enrich further its product mix to expand its market share and occupy a more favorable position in the future competition. With regard to this concerned acquisition, “China Electronic Report”interviewed Li Rongxin, deputy general manager of HSDC, and Ye Chuiqi, chief executive officer of Solomon Systech.

Objectives on technology import and market expansion

者:Journalist:  There’s a lot of attention in the industry to HDSC’s acquisition of Michrochip’s advanced touch control technology capital through its subsidiary holding company Solomon Systech. Would you please give some introduction to the progress of this acquisition?

Li Rongxin:  HDSC is the group company subsidiary to China Electronics Corporation (CEC) with integrated circuit as its main business, and the new display is its important strategic layout. This acquisition of Microchip’s mobile touch control technology capital was mainly implemented through HDSC’s subsidiary company Solomon Systech. Solomon Systech takes the display and touch control chip as its main market direction and can provide various IC display chips and system solutions to customers, while Microchip’s product lines are quite strong complements to Solomon’s. After the acquisition Solomon Systech will acquire from Microchip the maXTouch semiconductor products and the derivatives, relevant design database and over 500 patents. Meanwhile, Solomon can continue to sell tmaXTouch semiconductors and the derivatives.

Journalist:  Today there’s a rising trend of merger and acquisitions in the world semiconductor industry and a lot of cooperation on the acquisitions between the industry giants. China semiconductor companies are also involved in this wave. What’s your opinion toward this?

Li Rongxin: It’s true. Recent years there have been a lot of semiconductor merger and acquisitions (M&A) in the world, and also some China semiconductor companies have participated in the overseas M&A. But to be noticed, the M&A implemented by China companies have different objectives than that by international ones.  The M&A between international giants are more driven by the capital market. This is because of the recent slowing down development of global semiconductor industry, which is inevitable for an industry becoming mature. So, the companies have to enhance the capital usage efficiency requested by the capital market, which facilitates the frequent M&A between large semiconductor companies. The main objectives of China semiconductor companies to launch overseas acquisitions are to import the technology and expand the market.

Concerning more specifically this acquisition, this is because HDSC would like to make quickly an overall arrangement for the related market and keep up with the latest technology through acquisition at the time of OLED industry starting off hopefully. As the next generation of display technology, OLED market share is increasing continuously while China companies have still many weaknesses from material, equipment, process to display driver and touch control technology. To reduce and eliminate these gaps China will have to make an overall arrangement in early stage and strive to achieve the synchronous development of the whole industry chain. This time the acquisition is exactly HDSC’s overall arrangement in advance on the display driver considering that the selling capital from Microchip has a big complementary to Solomon Systech’s product lines and will effectively make up China’s gap in the OLED display driver and touch control IC fields.

Arrangement in early stage of OLED OLED with TDDI market

Journalist:Would you please give a detailed explanation on what’s the complementarity between the new bought capital and Solomon Systech? What new opportunity will it bring to Solomon Systech?

Ye Chuiqi: Solomon Systech’s product lines are divided into mainstream display and advanced display. The mainstream display has two sections of mobile display and large display. Mobile displays are mainly the mobile equipment (e.g., mobile phone) touch control IC, display driver IC (DDI) and embedded touch control and display driver IC (TDDI), and large displays are mainly the source DDI and gate DDI etc.  Embedded touch control and display driver IC (TDDI) is an integrated technology product which integrates the driver IC with touch control IC into a single chip and has an important role to slim the mobile equipment, increase the light transmittance and reduce production cost, therefore is the development target in the current mobile display field and also the development priority for Solomon Systech in the following several years. According to the analysis of market survey organization, it’s estimated that 2016 OLED market size is about 16 billion USD and it’s expected to grow up to 57 billion USD in the future 10 years. In TDDI it’s estimated the penetration rate will exceed 47% in the mobile phone market next year. The capital of Microchip in this acquisition belonged originally to ATMEL. ATMEL had more than 10 years of experiences in the touch control market and in 2015 it had still 10% of global market share, and it had especially the leading position in the touch control technology of AMOLED and POLED. After acquisition of this asset, Solomon Systech has a more complete overall arrangement on the technological products in the touch control market. Before domestic OLED capacity being truly developed in the market, Solomon gains already the OLED touch control technology and therefore can penetrate the market ahead of time and promote Solomon’s position in the mobile display market.

Journalist:  In the display driver field, our Taiwan vendors have a big advantage in the market share.  How to take this challenge for the company in the future? What are the benefits to the company through this acquisition for the future competition?

Li Rongxin: We went later to the display driver market, and in the early stage our Taiwan vendors had already made a lot of arrangements in the market. As a later comer we have to speed up to catch up. However, through this acquisition we have addressed at least the layouts in two aspects: Firstly, the expansion of the market. Now more and more customers have acknowledged us. Secondly, patent issues are addressed. With the deepening of internationalization, our competitors are all those international leading companies and hence patent is being concerned about unprecedentedly. In the future development of display driver field, HDSC must have a full coverage of its patents to avoid any patent related attacks and win the advantage in competition. After this acquisition this issue will be addressed and we have acquired more than 500 patents in one time.

Strive to be number 1 in domestic and top 3 in the world

Journalist: It’s always a challenge after M&A. What are the measures of Solomon Systech in this aspect?

Ye Chuiqi: How to do integration after acquisition is a great learning and especially a strong challenge to an overseas acquisition and integration. With regard to the tactics, each acquiring firm in M&A will have different tactics which are made upon the situation and condition. Solomon Systech has a relatively direct approach for the integration and management in this acquisition. We set up an independent division and operate independently for the newly bought section. The most valuable asset of this acquisition is the OLED related touch control technology and products, including the market much concerned AMOLED and PLOED. In the future we will put all the newly bought resource into the OLED direction and the original Solomon Systech related people will focus on the TDDI direction of LCD.

Journalist:  What are the development goals of HDSC and Solomon Systech in the new display field in the future?

Li Rongxin: To be simple, in the display driver field we are striving to be number one in domestic and top 3 in the world. This is our development goal.

Ye Chuiqi: The corporate set up our goal to be the solution provider for display driver and touch control technology. Anything related with this kind of solution will be in our future development direction. In the future two or three years, we will focus mainly on the main business, i.e., the development of large-size screen DDI and small-size screen TDDI.  Both LCD and OLED technology are in our list to focus on.  If we make a further prospect, we anticipate there will be much wider growth space for display driver and touch control products in the future IOT equipment. This is our next target market.


Address: Pudong New Area of Shanghai Road Liangxiu three 305 seat 112 Y1    Tel:021 51357777    Fax:021-51357799

©2015-2017  华大半导体有限公司  版权所有    沪ICP备15037520号

Powered by Yongsy

Recruitment    |    Staff Presence    |    contact us