Combined Entity under Hon Hai Ranks Among World's Top-3 Sapphire Suppliers

Taipei, July 13, 2011 (CENS)--Alpha Crystal Technology Corp. and TeraXtal Technology Corp., both under the Hon Hai Group, recently were combined through an equality stock swap, becoming one of the world's top three sapphire suppliers and Taiwan's No.1 supplier of the LED material.

The combination, in which Alpha Crystal perishes and TeraXtal survives, implies the group's manufacturing strategy swing to sharpening cost efficiency of components production from reining in end-product production cost.

Although Taiwan is already the world's No.1 LED supplier by volume, it still heavily depends on foreign sources for sapphire substrates, on which LED chipmakers lay illuminating chemicals. The lucrative demand on the island has recently drawn local silicon-wafer manufacturers as Untied Microelectronics Corp. (UMC), Sino-America Silicon Products Inc., and Wafer Works Corp. into this field.

Hon Hai, which is currently Taiwan's No.1 manufacturing conglomerate by revenue, has branched out into LED manufacturing by outfitting itself with all manufacturing capabilities but epitaxy-wafer manufacturing. It acquired packager Advanced Optoelectronic Technology Inc., opened lighting-fixture maker Foxsemicon Integrated Technology Inc. and invested in the two sapphire makers. Baseline date for the merger of the two companies is set on Dec. 31.

According to TeraXtal executives, the combination will boost the combined entity's competitiveness by integrating their resources and technologies as well as production scales. In 2010, Alpha earned NT$64 million (US$2.2 million at US$1: NT$29) in after-tax income on revenue of NT$290 million (US$10 million), while TeraXtal made NT$407 million (US$14 million) on revenue of NT$1.7 billion (US$58 million). The combination is valued around NT$3 billion (US$103 million).

Founded in 2000, TeraXtal began producing sapphire substrates around two years ago. To minimize the risk of over-dependence on limited supply sources, TeraXtal set up Alpha to make the ingots. Currently, 2-inch sapphire substrates are the company's commodity products, with 4-inch and 6-inch substrates built to orders. Besides, Alpha, its ingot suppliers also include Rubicon Technology Inc. of the United States.