13 December 2010

SemiLEDs’ IPO raises $79m in net proceeds

In its initial public offering of its common stock on the NASDAQ Global Select Market last Thursday, high-brightness LED chip and component maker SemiLEDs Corp of Boise, ID, USA (which has chip fabrication facilities in Hsinchu Science Park, Taiwan) sold 5.25 million shares at $17 each (above the planned range of $14.50–16.50). This has raised about $89.25m (9.7% more than the anticipated $81.4m). Net proceeds are about $79m.

If the underwriting syndicate exercises in full its 30-day option to purchase an extra 787,500 shares to cover over-allotments, total net proceeds would be about $91.4m.

Founded in 2005, SemiLEDs’ proprietary blue, green and ultraviolet (UV) ‘metal vertical photon’ (MvpLED) chip design features a vertical LED structure on a patented copper alloy base (after removal of the sapphire substrate) that provides what is claimed to be the best thermal resistance on the market (0.4°C/W) — allowing better heat removal than for LEDs that retain the sapphire substrate — as well as electrical and optical advantages such as greater luminous efficacy (more than 120lm/W) and longer lumen maintenance. Reclamation of the sapphire substrate also allows reductions in both the manufacturing cost and the dependence on sapphire (for which the current short supply is increasing cost). The firm also believes that its technology will aid its migration to larger (6-inch) wafer sizes.

SemiLEDs fabricates LED chips for sale mainly to chip-packaging customers in China, Taiwan and other parts of Asia, or to distributors who sell to packagers. It also packages some of its chips into LED components for sale to distributors and end-customers in selected markets (mainly for general lighting applications, including street lights and commercial, industrial and residential lighting).

For fiscal 2010 (to end August), profit was $10.8m on revenue of $35.8m, more than tripling from fiscal 2009’s $11.6m (which yielded a loss of $3.7m). Gross margin grew from 4.6% in 2009 to 45.1% in 2010.

SemiLEDs says that it intends to use proceeds from the IPO for expanding production capacity in Taiwan, R&D expenses related to LED chip production based on 6” wafers, and general corporate purposes (including working capital and capital expenditures). The firm is already building additional capacity through an LED chip-making joint-venture China SemiLEDs (Xurui Guangdian Co Ltd) formed in January in Foshan, Guangdong Province (paying $14.7m for a 49% stake). China SemiLEDs is constructing manufacturing facilities (to be operational after January).

SemiLEDs may also use part of the proceeds to acquire or invest in complementary technologies, solutions or businesses or to obtain rights to such complementary technologies, solutions or businesses.

On Friday, SemiLEDs’ chairman & CEO Trung T. Doan visited the NASDAQ MarketSite in Times Square and presided over the opening bell to celebrate the IPO. After opening trading under the symbol ‘LEDS’ at $24.01 (41% above the $17 IPO price), the firm’s share price subsequently rose to more than $27.00, before closing the day at $25.76 (up 52%).

See related items:

SemiLEDs files for $172.5m IPO

Tags: SemiLEDs

Visit: www.semileds.com

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