'Small fish swallows big fish' - that was how one Beijing newspaper described a mainland technology firm's purchase of a South Korean liquid-crystal display (LCD) maker, in the biggest foreign acquisition by a Chinese high-technology company.
BOE Technology announced last week that it had bought Hydis, a subsidiary of Korea's Hynix Semiconductor, for US$200 million. As part of the deal it also assumed responsibility for the factory's debts of US$180 million.
This is the first time that a mainland company has acquired core TFT-LCD (thin-film transistor LCD) technology. Hydis ranks ninth in the world in output of TFT-LCDs, which are used in personal computers, mobile phones, car guidance systems and colour televisions, with a share of about 4 per cent of the world market.
'Our plan is to become the world's third-largest maker of TFT-LCDs,' BOE vice-president Chen Yanxun said.
The company is taking a big gamble. The cost of the acquisition, US$380 million, is equal to nearly half its assets - 6.5 billion yuan (about HK$6.1 billion) - and it had to borrow up to US$210 million to finance it, according to one official newspaper.
BOE plans to invest US$500 million in a new Beijing plant to produce fifth-generation TFT-LCDs, using the technology it has acquired. Two districts of the city are competing fiercely for the factory. One has offered to put up 15 per cent of the cost, which will be repaid if it runs smoothly.
