The United States vetoes the Chinese acquisition of Philips Lumileds because of LED technology related to military industry

In mid-January this year, the Chinese buyer, who had been waiting for nearly a year, was blocked by the United States from acquiring 80.1% of the shares of Lumileds, a subsidiary of Philips in the Netherlands. The reason for the rejection has never been known to the outside world.

Recently, "Reference News" quoted foreign media sources as saying that an expert and another person involved in the transaction discussions revealed that concerns about China's ambitions in the chip field were the main reason why U.S. officials refused to approve the merger.

However, industry insiders said that the United States vetoed the transaction not because it was worried about the pure LED chip technology field, but because LED chips belong to the field of semiconductor professional technology. If the chip technology is used in various precision electronic equipment and military fields, it will be detrimental to the protection of its advantageous industries.

The reason for the rejection was revealed

On January 22, Philips announced that it would stop selling its lighting components and automotive lighting business to Chinese investors due to opposition from US regulatory authorities. Philips said that although the company has done a lot of work to try to eliminate the concerns of relevant regulatory authorities, Philips' plan to sell 80% of Lumileds' shares has not yet been approved.

According to data, Lumileds, a subsidiary of Philips, is the world's leading manufacturer of lighting equipment. Its products include lighting components, general lighting, automotive lighting and mobile electronic equipment lighting. The company's business covers more than 30 countries around the world.

The U.S. regulatory authorities vetoed the equity transaction of Lumileds, a company owned by Philips that engages in the residential lighting industry, which surprised the industry. The Committee on Foreign Investment in the United States, which vetoed the transaction, did not disclose the reasons.

On February 14, "Reference News" quoted the US "New York Times" as saying that an expert and another person involved in the transaction discussions revealed that there are concerns about China's ambitions in the chip field, especially a semiconductor material called gallium nitride, which is the main reason why US officials refused to approve a merger transaction. So far, this is the earliest news to reveal why the deal was rejected.

“Using gallium nitride as a substrate and then doing epitaxy to make LED products, currently only the American company Sorra is known to be doing this. It is not sure whether Lumileds, a subsidiary of Philips, has mastered this technology.” said Wang Fei, chief analyst of LEDinside China.

Wang Fei introduced that the three most commonly used LED chip substrate materials currently on the market are sapphire substrate, silicon carbide substrate and silicon substrate. Among them, the first two were initiated and mastered by Japan and the United States. The silicon substrate LED chip technology developed by China's Jingneng Optoelectronics and Nanchang University also won the first prize of the National Technology Invention Award, breaking the foreign monopoly of high-power LED technology. However, there are few companies that have mastered the LED chip technology of gallium nitride as substrate material.

"If gallium nitride material technology is only used in LED chip technology, it is not worth being vetoed by the United States from Chinese buyers." Wang Fei believes that gallium nitride belongs to the third generation of semiconductors. Because gallium nitride materials can withstand high temperatures and pressures better than other materials in semiconductor technology, and have higher process density, they are widely used in electric vehicles, communications and even military fields. The other party is more sensitive and may veto it, but it is not sure whether Lumileds has mastered this technology.

Not only LED chip technology

In addition, Wu Yulin, general manager of Guangdong Casio Lighting Co., Ltd., told the "Daily Economic News" reporter that if only LED chip technology would not be rejected, the invisible additional results extended by the acquisition of Lumileds, a subsidiary of Philips, may be the reason why the transaction was rejected.

"Domestic LED chip technology is actually not much worse than foreign ones. Philips management also realized that it no longer has a big advantage, so it hopes to sell this asset. Therefore, it is difficult to say that there is a big gap in my country's LED chip technology." Zhang Xiaofei, chairman of Gaogong LED, told reporters that the silicon substrate LED chip technology developed by Professor Jiang Fengyi of Nanchang University and Jingneng Optoelectronics has also accumulated a large number of patent advantages, creating a new path in the industry.

“When acquiring a company, in addition to technology, what is more important is the technical archives.” Wu Yulin said that as a century-old company, Philips has mastered the most advanced lighting technology in the world and even provides supporting lighting technology services with US military industrial enterprises. If the Philips subsidiary is acquired, the lighting systems that Philips subsidiary made for customers such as aircraft, satellite navigation, etc. in the early stage will be obtained by the buyer, and the relevant original supporting design drawings and processes will be obtained by the buyer. This is something the other party is more afraid of.

Wu Yulin also said that compared with China, there are not many advantageous industries left in the United States. China has caught up in the downstream manufacturing industry, but there are still many gaps in the semiconductor industry and IT industry. If China wants to buy such a large enterprise, if it involves the semiconductor material technology of the two countries, the United States may be more strict.