(Yicai Global) June 24 -- TCL Technology, the Chinese manufacturer of TVs and display panels, today announced that it will invest about CNY11 billion (USD1.6 billion) to buy Zhonghuan Electronics Information Group, in order to improve the positioning of its semiconductor industry chain.

Zhonghuan Electronics Information Group is owned by two state-owned investment companies under the Tianjin Municipal Government in north China, and is publicly traded on the Tianjin Property Rights Exchange for a reserve price worth about CNY11 billion (USD1.6 billion).

The target company’s core assets include two listed firms on the Shenzhen Stock Exchange: Tianjin Zhonghuan Semiconductor is engaged in the manufacturing of solar monocrystalline silicon wafers, batteries, semiconductor materials and semiconductor devices while Tianjin Printronics Circuit Corporation focuses on the research and development, production and sales of printed circuit boards.

By acquiring Zhonghuan, TCL Technology, whose main business is semiconductor displays, aims to improve its positioning in the upper stream of the semiconductor display sector’s industry chain and generate synergies with its display business. It also hopes to improve its business income and profits amid the low ebb in the display panel sector.

Zhonghuan has set up a number of joint ventures with South Korean conglomerate Samsung in Tianjin while the Korean electronics giant has maintained a good relationship with TCL Technology. TCL owns a stake in Samsung’s liquid crystal display panel project in Suzhou.

TCL Technology Chairman Li Dongsheng, commenting on the potential acquisition earlier this year, said that it should first generate synergy with the company’s display business and should be reasonably priced, with the third point being that TCL will not spend too much to improve its performance. Zhonghuan Electronics apparently meets these three standards.

TCL Technology [SHE: 000100] shares closed down 0.16 percent at CNY6.1 (86.8 US Cents) today.

Editors: Tang Shihua, Peter Thomas