Will Semiconductor plans to acquire Synaptics TDDI business for US$120 million

On the evening of April 14, Will Semiconductor Co., Ltd. issued an announcement on the company's increase in external investment and cash acquisition of assets, stating that the company held a board meeting on the same day and reviewed and approved the "Proposal on the Company's Increase in External Investment and Cash Acquisition of Assets", agreeing that the company will increase its capital in Creative Legend Investments Ltd. (hereinafter referred to as the "target company") by US$34 million in cash, holding 70% of the target company's equity with a total investment amount of US$84 million, and acquire Synaptics Incorporated's (hereinafter referred to as "Synaptics") single-chip liquid crystal touch and display driver integrated chip business based in Asia (hereinafter referred to as "TDDI business" or "target business") through the target company.

According to the authorization of the board of directors, Will Semiconductor Limited (hereinafter referred to as "WILL Hong Kong"), a wholly-owned subsidiary of Will Semiconductor, signed a "Shareholder Agreement" with Suzhou Huquan Huachuang Equity Investment Partnership (Limited Partnership) (hereinafter referred to as "Huquan Huachuang") to jointly invest US$120 million to acquire the target business. Among them, Will Hong Kong subscribed US$84 million and Huquan Huachuang subscribed US$36 million.

Will Semiconductor disclosed that Huachuang, a special purpose entity (SPV) specially used to acquire Synaptics TDDI business, has no other investment projects except this one; and this transaction does not constitute a related transaction, and the transaction amount does not reach 50% of the company's latest audited net assets. The review authority of this transaction falls within the scope of the board of directors' responsibilities and authority, and does not need to be reviewed by the company's general meeting of shareholders.

It is understood that Synaptics was founded in 1986 and is a world-leading design and manufacturing company for the development of human-machine interface interactive solutions for mobile computing, communication and entertainment devices. Based on the company's deep R&D investment in related fields, extensive intellectual property accumulation and reliable supply chain system, it has formed a rich product portfolio in the fields of touch, display, biometrics, voice, audio and multimedia. Synaptics products combine ease of use, functionality and aesthetic requirements to develop corresponding solutions for mobile phones, laptops, smart homes and automotive markets. Synaptics was publicly listed on NASDAQ in 2002.

In 2014, Synaptics took the lead in launching the TDDI (Touch and Display Driver Integration) concept, which integrates touch and display drivers to make mobile electronic devices thinner, longer battery life, lower cost and better display. After years of promotion by Synaptics, TDDI technology has become the mainstream technology for mobile terminal display and touch, and its penetration rate is rapidly expanding.

With the demand for TDDI support in smart devices in recent years, integrating the display driver chip and touch control to provide consumers with a better experience has become the choice of many smart application products. Synaptics' TDDI chip customers are well-known mobile phone manufacturers such as Huawei, OPPO, Samsung, and Xiaomi. With the company's years of IP accumulation, Synaptics has created a full range of high, medium and low-end product series, and can help customers customize each generation of products. The product performance is ahead of its peers, with good refresh rate and stability, and has been certified by a large number of brand customers.

Currently, Synaptics' main competitors in the TDDI business are Novatek, Himax, and FocalTech. In the past three years, the revenue share of Synaptics' TDDI business has continued to increase. In 2019, TDDI business accounted for nearly 22% of Synaptics' total revenue. The specific revenue and share are as follows:

Will Semiconductor said that due to the deterioration of the Sino-US trade environment in the past two years, domestic terminal manufacturers have actively sought to replace domestic products, and Synaptics, as a US-funded company, has been greatly affected in its performance. The company's acquisition of the TDDI business will help achieve independent control of domestic display driver products. By leveraging the company's deep cooperative relationship with terminal customers, the company's TDDI business market share is expected to increase rapidly.

"The target of this transaction is mainly Synaptics Incorporated's single-chip liquid crystal touch and display driver integrated chip business based in Asia, and fixed assets, intellectual property rights, personnel, inventory and other assets related to the target business." Wells Fargo Holdings said that at the time of the asset delivery, the ownership of the target assets of this transaction was clear. Except for some patents pledged by the seller to WELLS FARGO BANK, NATIONAL ASSOCIATION, there was no mortgage, pledge or any other restriction on transfer, and there was no litigation, arbitration matters or judicial measures such as seizure and freezing, and there were no other circumstances that hindered the transfer of ownership.