(Yicai) Dec. 29 -- TCL China Star Optoelectronics Technology, a leading maker of liquid crystal displays, has entered the light-emitting diode chip sector by acquiring a controlling stake in Zhaoyuan Optoelectronics for CNY490 million (USD69.7 million).

TCL CSOT bought 80 percent of Zhaoyuan through the Fujian Provincial Equity Exchange Center on Nov. 28, its parent company TCL Technology announced on Dec. 26. The transaction also included CNY1.8 billion (USD256.1 million) in debt claims as of March 31.

The acquisition is intended to build a fully vertically integrated industry chain from LED chips to display modules and to create a supply chain that is independently controllable, Huizhou-based TCL Technology said.

TCL Technology’s shares [SHE: 000100] closed 1.1 percent higher at CNY4.49 (64 US cents) each today. The benchmark Component Index fell 0.5 percent.

Zhaoyuan had a net loss of CNY300 million in the first 10 months of this year on revenue of CNY710 million, with total liabilities of CNY1 billion as of the end of October. Its loss topped CNY389 million last year, while revenue reached CNY888 million.

Zhaoyuan has LED chip production lines and substantial capacity, having achieved industry-leading levels in high-value segments including backlighting, Mini LED direct displays, and car lighting, TCL said, adding that its losses mainly stem from a suboptimal product structure, resulting in low gross margins.

TCL CSOT will enhance its profitability through tech enablement and customer introductions following the acquisition, accelerating the industrialization of Mini and Micro LED advanced display technologies in televisions, commercial large screens, car displays, and others, TCL added.

Behind this acquisition lies the rapid growth of the Mini LED TV market, with global shipments expected to surge 58 percent to 12.4 million units this year, despite overall TV shipments falling 0.7 percent to 206 million, according to data from market researchers Runto.

For the Chinese market, Mini LED TV shipments likely soared 93 percent to 8 million units, taking a 24 percent market share and becoming the mainstream product in the mid-to-high-end TV segment. In addition, Micro LED chip tech is particularly critical to success amid growing competition for next-generation Micro LED displays.

TCL CSOT previously partnered with Sanan Optoelectronics in Xiamen to form Chipinking and build a Micro LED pilot production line, analysts said. With the acquisition of Zhaoyuan, it will achieve full Micro LED supply chain integration and gain greater control in the next wave of display tech competition, they added.

BOE Technology Group, another major Chinese manufacturer of liquid crystal displays, took control of HC SemiTek in 2023 and invested in a Zhuhai MLED production line last year, while Hisense Visual Technology pioneered the launch of RGB Mini LED TVs after buying Changelight.

Editor: Martin Kadiev