Tech Stalwart TCL Preparing to Privatize Its TV Arm?

As one of China’s earliest technology standouts, TCL Electronics Holdings Ltd. (1070.HK) has always been ambitious.

The company shot to global fame in 2003, when its parent, TCL Technology, struck a $560 million deal to take over the TV assets of France’s Thomson SA , making it the world’s largest TV maker. A year later it formed another joint venture by taking over the cellphone operations of France’s Alcatel. Neither of those tie-ups was particularly smooth, with the Thomson deal unraveling in three years, and the Alcatel deal in just one.

Both deals were driven partly by elements of politics as well as corporate pride, as China urged its companies to “go global” and TCL answered that call. Two decades later, could this former paragon of “going out” be preparing to do just the opposite and turn inward?

On Oct. 12, the Hong Kong-listed maker of TVs and other display devices announced a series of purchases of its publicly traded shares by its parent, its employee share ownership plan and its highly regarded new chairwoman Du Juan. Those purchases raised insider control of the company to at least 60%, and probably closer to 70%. The rapid shrinking of its public float raises the question of whether TCL Electronics might be inching towards privatization, as investors abandon its shares in favor of a newer generation of sexier high-tech companies.

If such a privatization is coming, investors certainly didn’t seem to sense it. The company’s stock price rose after the corporate share purchase announcement last Wednesday, though only by a very modest 1% to HK$3.

TCL has been sailing through choppy waters lately. It has been feeling the impact of disruptions from the global pandemic and China’s “zero-Covid” policy, U.S.-China trade tensions and global inflation. At the same time, TCL Technology is doing its best to follow Beijing’s latest directives calling on tech companies to innovate and stay at the leading edge of their fields.

TCL Technology’s other units have been taking steps to do just that through a series of major acquisitions and other moves over the last five years. Those include a new move into solar energy through a $1.9 billion polysilicon joint venture; the purchase of a China-based LCD plant from South Korea’s Samsung; and boosting its semiconductor business through the 2020 purchase of Zhonghuan Electronics’ core assets for about 11 billion yuan ($1.5 billion).

The moves come as China itself moves into a new stage that favors big state-owned enterprises as drivers of its tech development, taking over the mantle from a younger group of privately owned companies like Alibaba (BABA.US; 9988.HK) and Tencent (0700.HK) that have more recently fallen out of favor.

While the broader corporate landscape changes, TCL’s publicly listed units have also gone through their own steady series of changes in their more than two decades of history. Founder Li Dongsheng took his first company public in 1999, about the same time it began exporting to its first international market, Vietnam. The parent TCL Corp. (000100.SZ) listed in Shenzhen in 2004.