Money Into Mini
Sanan Optoelectronics (600703.CH) completed a private equity sale of $1.13b US to be used to increase the capital of the company’s Mini/Micro LED project in Hubei province. The project has turned profitable according to the company as of September of this year on a net basis and the company feels the expansion is warranted. The shares were purchased by a number of institutions, some state-owned, and are locked in for 6 months. The project was originally announced in 2019 with a 3-year construction window and a production goal of one year after construction was completed, although there have been reports that Sanan had been producing production samples in March of this year.
Sanan has signed agreements with Samsung (005930.KS) for the supply of Mini-LEDs, likely being used for watch displays, a JV with Chinastar (pvt) for Mini-Micro-LED R&D, and has been approved as a supplier to Apple (AAPL), so the company has a legitimate reason for raising capital to expand production, at least from a customer perspective, although Apple has also been working with Epistar (3714.TT) and automotive lighting specialist AMS OSRAM (pvt) for a number of years on various Mini-LED and Micro-LED projects. We expect the latest capital raise is Sanan’s push to become the dominant volume supplier to Apple, and Apple is certainly one to encourage additional capacity investment from suppliers.
The Mini-LED market is a relatively new one and is still evolving and while we expect the Mini-LED market, which is an adjunct to LCD displays, to grow steadily over the next few years particularly for high-end LCD displays, we see such vast differences in estimates and forecasts for the Mini-LED space (estimates range from $39m to $174m for 2020 and from $81m to $411m for 2021), that it seems a bit problematic when it comes to evaluate such diverse forecasts without knowing what is included. The same goes for longer-term forecasts, which vary even more greatly out in the 2027 – 2030 timeframe, and the prospects for Micro-LED, which, in theory, would compete with LCD and self-emissive displays, are even more tenuous. Sanan, already a major LED producer, is among other Chinese LED producers who have been investing is Mini-LED capacity this year, including $717m from Jiangxi Zhaochi Semiconductor (pvt), a similar capacity increase from Xiamen Changelight (300102.CH) and a 289m investment in HC Semitek (300323.CH) by China’s leading LCD display producer BOE (200725.CH), with these firms also looking to become major Mini-LED suppliers as the market develops.
Sanan has signed agreements with Samsung (005930.KS) for the supply of Mini-LEDs, likely being used for watch displays, a JV with Chinastar (pvt) for Mini-Micro-LED R&D, and has been approved as a supplier to Apple (AAPL), so the company has a legitimate reason for raising capital to expand production, at least from a customer perspective, although Apple has also been working with Epistar (3714.TT) and automotive lighting specialist AMS OSRAM (pvt) for a number of years on various Mini-LED and Micro-LED projects. We expect the latest capital raise is Sanan’s push to become the dominant volume supplier to Apple, and Apple is certainly one to encourage additional capacity investment from suppliers.
The Mini-LED market is a relatively new one and is still evolving and while we expect the Mini-LED market, which is an adjunct to LCD displays, to grow steadily over the next few years particularly for high-end LCD displays, we see such vast differences in estimates and forecasts for the Mini-LED space (estimates range from $39m to $174m for 2020 and from $81m to $411m for 2021), that it seems a bit problematic when it comes to evaluate such diverse forecasts without knowing what is included. The same goes for longer-term forecasts, which vary even more greatly out in the 2027 – 2030 timeframe, and the prospects for Micro-LED, which, in theory, would compete with LCD and self-emissive displays, are even more tenuous. Sanan, already a major LED producer, is among other Chinese LED producers who have been investing is Mini-LED capacity this year, including $717m from Jiangxi Zhaochi Semiconductor (pvt), a similar capacity increase from Xiamen Changelight (300102.CH) and a 289m investment in HC Semitek (300323.CH) by China’s leading LCD display producer BOE (200725.CH), with these firms also looking to become major Mini-LED suppliers as the market develops.
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