(Yicai Global) Nov. 7 -- Shares in HC SemiTek Corp surged as much as 18.7 percent today after the Chinese light-emitting diode chip manufacturer said display panel giant BOE Technology Group has become its biggest shareholder.

HC SemiTek Corp’s share price [SHE:300323] closed up 13.5 percent at CNY8.41 (USD1.20). Earlier in the day it hit CNY 8.80, shattering a previous high set in March. While BOE’s stock [SHE:000725] gained 1.4 percent to close at CNY3.59.

BOE has subscribed to CNY2.1 billion (USD291.2 million) worth of new shares issued in a private placement plan, grabbing a majority stake of 23.08 percent, Wuhan, northern Hubei province-based HC SemiTek said yesterday, citing the deal signed between the two parties on Nov. 4.

BOE bought 272 million shares at a price of CNY5.60 (USD0.80) each, HC SemiTek said. This was a 24 percent discount on the chipmaker’s closing price of CNY7.41 on Oct. 28, the last trading day before the firm suspended trading ahead of the reorganization.

BOE also signed a deal with fellow shareholder New Sure the same day to secure its voting rights, boosting BOE’s total voting rights to 26.66 percent.

Former majority shareholder Zhuhai Huafa Real Industry Investment Holding has had its holdings diluted to 19.13 percent from 24.87 percent. The state-owned company said it will no longer pursue the right to control HC SemiTek.

The proceeds will mostly go towards micro-LED wafer manufacturing and packaging testing bases as well as to supplement working capital, said HC SemiTek, which is the second biggest supplier of LED chips in China. Its hardware can be found in a wide range of end devices from tablet computers, to television screens and in-car devices. It also has a rich client network and supply chain resources.

The acquisition will help BOE quickly establish itself in the LED chip industrial chain, ensure it has adequate supply of raw materials and enhance competitiveness, Beijing-based BOE said the same day.

Micro-LED displays, which use tiny LED devices to directly create color pixels, have experienced strong growth in recent years in areas such as backlit displays and large outdoor screens. The market is likely to be worth CNY18.9 billion (USD2.6 billion) by 2030, growing at a compound annual growth rate of 18 percent, according to market intelligence provider TrendForce.

But a recent lackluster performance has meant that their share price is relatively low at the moment and, as a result, leading display and color TV makers are taking advantage to consolidate their upstream resources.

One of China’s top three TV makers, Hisense Visual Technology, hiked its holdings in LED chip firm Changelight again last week, this time to 16.8 percent last week and it is likely to continue to buy in in the next year, Xiamen, southeastern Fujian province-based Changelight said.

Editors: Tang Shihua, Kim Taylor