China's Hua Capital buys chip unit from US-listed Synaptics
Hua Capital, a Chinese investment firm that primarily focuses on the semiconductor industry, has agreed to acquire an Asia-based mobile LCD chip business from US-listed Synaptics for $120 million in cash.
Synaptics claims to be a leader in human interface technology, producing integrated circuits and processors that support touch, display, biometrics, voice, audio and multimedia capabilities in mobile, PC and smart home devices. It is also a supplier to the automotive industry.
Hua Capital is buying the company’s touch and display driver integration (TDDI) business for mobile LCDs. Touch sensor integration delivers thinner and brighter displays with more responsive touch performance. TDDI technology combines the underlying display driver and touch sensor in a single chip for greater manufacturing efficiency.
Synaptics’ major competitors in display driver and TDDI products for the mobile and PC applications are all based in Asia, Focaltech, Himax Technologies, Novatek Microelectronics in Taiwan and Samsung and SiliconWorks in Korea. The company derived 86% of its $1.47 billion in revenue for 2019 – across all product areas – from customers in China, Japan and Korea. China is by far the single largest customer.
Mobile product applications accounted for $900.1 million of total revenue for the year, with PC and internet of things generating $258.9 and $313.2 million, respectively. However, Synaptics noted in its 2019 annual report that it sees considerable upside in the automotive segment as carmakers transition to TDDI and incorporate fingerprint seniors. In the past 12 months, it has secured supply contracts with six original equipment manufacturers in Europe, Asia and North America.
“We will continue to invest in technologies for the premium segments of the mobile market where our advanced touch controllers and DDICs [display driver integrated circuits] deliver best-in-class performance,” said Janice Mori, a senior vice president in Synaptics’ touch and display division, in a statement. “In addition, we will still develop TDDI solutions for automotive applications where we have an unparalleled roadmap and are currently capturing the majority of sockets globally.”
Beijing-based Hua Capital was founded by an investment team from Tsinghua Holdings and China Fortune-Tech Capital. It was especially active on outbound deals in 2015 and 2016, participating in acquisitions of semiconductor manufacturers Integrated Silicon Solution and OmniVision Technologies, both US-listed.
The firm came unstuck with an attempted $2.6 billion privatization of Fairchild Semiconductor International as US regulators became warier of Chinese activity in the domestic semiconductor industry. Fairchild rejected the offer, citing "an unacceptable level of risk" that approval would not be forthcoming from the Committee on Foreign Investment in the United States (CFIUS).
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