Jingfeng Mingyuan: Acquired Yichong to supplement the full product matrix, and the revenue scale was among the top three in the industry
DATE:  Nov 08 2024

With the introduction of six mergers and acquisitions and eight articles of the Science and Technology Innovation Board, the entire semiconductor industry is full of expectations for mergers and acquisitions. At present, there are some "missing pearls" in the market that have not yet had time to be listed due to the high threshold, and are actively looking for opportunities for strong alliances between giants in the same industry to achieve the common reinforcement of the strength of both sides. For enterprises, it is not only the key to enhance the competitiveness of enterprises, but also an important way to optimize the industrial structure by fully grasping the policy guidance of the central and local regulatory agencies to support the mergers and acquisitions of listed companies and strengthening industrial integration, grasping market opportunities, and integrating high-quality resources through asset restructuring, investment and mergers and acquisitions in a timely manner in combination with their own actual conditions.

Jingfeng Mingyuan(688368. SH) on the evening of November 4 issued a relevant announcement on the major asset restructuring plan, the company intends to issue shares, convertible corporate bonds and cash payment to Guangzhou Weijunsi, Zhihe Juxin, Jinju Lihe, Zhihe Jude, Zhihe Jucheng and other 50 counterparties to purchase their total holdings of Sichuan Yichong Technology Co., Ltd. (hereinafter referred to as "Yichong Technology") 100% of the equity, and raise matching funds.

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It is understood that Yichong Technology was founded in 2016 and has been deeply engaged in the field of wireless charging for nearly ten years, and has developed into a global leading enterprise in wireless charging chips. Yichong Technology is one of the formulators of wireless charging protocol, leading the trend of wireless charging technology, accumulating a large number of advantageous technologies, including the world's first multi-coil high-energy wireless charging system under the Qi standard, 0~80W power mobile phone widely used small inductance system architecture, etc., holding 15 Qi core technology patents, and has a number of core technologies and key patent layouts in the direction of foreign body detection, working frequency expansion, high-speed data communication, electromagnetic interference, etc. In recent years, relying on the leading technical team and years of technology accumulation in the field of wireless charging, the company has entered the wired charging market such as charge pump fast charging and charging management chips and the automotive power management chip market with higher technical difficulties. From 2023 to 2024, Yichong Technology has been listed on the list of the top 100 new economy enterprises in Sichuan Province and China's potential unicorn enterprises, which can be seen in its technical strength and high growth.

The founding team of Yichong Technology comes from Tsinghua University, has worked in well-known companies at home and abroad, and has also introduced outstanding technical talents from a number of well-known companies in the industry, and the core members of the team are senior experts in the industry, jointly forming a high-quality management and R&D team. Pan Siming, chairman and general manager, studied in the Department of Electrical Engineering of Tsinghua University with a bachelor's degree, and later went to the United States to study for a master's and doctoral degree. So far, Yichong Technology has completed multiple rounds of financing, gathering more than 30 top investment institutions such as SAIC, Geely Capital, NIO Capital, CAS Investment, VIS and Huatian Technology.

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The buyer, Jingfeng Mingyuan, is one of the leading power management chip and control driver chip design companies in China, focusing on the R&D and sales of LED lighting power supply chips, AC/DC power supply chips, motor control driver chips and DC/DC power supply chips. In recent years, a series of industrial mergers and acquisitions have been carried out around the company's strategic planning, and have successively taken Shanghai Laishi Semiconductor, Shanghai Xinfei Semiconductor, Lingou Chuangxin and other companies into its arms to expand its business territory through acquisitions and investments.

Jingfeng Mingyuan and Yichong Technology are both one of the leading enterprises in integrated circuit chip design, and the supply chain of outsourcing processing required by products, such as wafer manufacturing, packaging and testing, is both overlapping and complementary. After the completion of this merger and integration, the two parties will increase the scale of centralized procurement, share the process platform, optimize the supply chain management capabilities, and will obtain higher bargaining power and resource support on the procurement side. The long-term accumulation of high-quality supply chain, automotive-grade product supply chain and overseas supply chain to meet the requirements of global top customers will provide strong supplements and support for the global expansion of Jingfeng Mingyuan's products and markets.

The target company complements the product matrix of Jingfeng Mingyuan in an all-round way

Yichong Technology is a founding member and super member of the world's leading Wireless Power Consortium (WPC). In January 2020, Yichong Technology, GE, Philips, and Robert Bosch jointly released the wireless charging patent pool of the Qi protocol standard (the most commonly used protocol standard in the mobile device industry), and Intel, Panasonic, WiTricity, etc. have also joined the patent pool since then. As one of the participants in the formulation of the Qi protocol standard, Yichong Technology has a deep understanding and forward-looking judgment of the wireless charging protocol standard, and has an incomparable leadership in the progress of R&D and product launch to the market.

Wireless charging chips refer to the electronic chips used in wireless charging technology, which are the key to communication and control between the wireless charging system and the charger and equipment. Due to the high integration of power devices, high-speed/high-precision analog circuits and large-scale digital circuits in the design and manufacturing process of wireless charging chips, so as to improve charging efficiency, ensure the safety of charging, and ensure the high reliability and practicability of the system, the technical barriers are high.

According to data from the Radio Association of China, the global wireless charging market continues to expand, with the global wireless charging market size reaching US$948 million in 2016 and US$1.564 billion in 2022, and the preliminary statistics show that the market size in 2023 will be US$1.949 billion, with a compound annual growth rate of 24.6% from 2016 to 2023. The main factors driving the growth of the wireless charging chip market are the deepening trend of lightweight and non-porous mobile phones, as well as the continuous penetration of wireless charging into wearable, automotive, industrial and other scenarios. The core technology and product performance of Yichong Technology's wireless charging products are on par with or even surpass international manufacturers, and have replaced a considerable part of the market share of international manufacturers, and have successfully entered Samsung, Honor, Lenovo, Xiaomi, vivo, OPPO, Meizu, Transsion, Goolge and other well-known mobile phone brands, and has become the main supplier of wireless charging products of many well-known mobile phone manufacturers, helping the domestic substitution and overseas strategy of wireless charging chip products.

In the future, with the continuous progress of wireless charging technology, in addition to the fields of consumer electronics and automobiles, the application of wireless charging technology in medical, aerospace, military and other fields is also constantly exploring and expanding, which will bring new growth opportunities to the wireless charging chip market, and is bound to make the overall layout of Yichong Technology very imaginative.

It is worth mentioning that as a forward-looking technology company, Yichong Technology has developed rapidly in the field of power management chips in recent years, and its market influence has been increasing. The ultra-high power charge pump fast charging chip launched by Yichong Technology has been mass-produced on well-known brand models such as Honor and Lenovo Moto. At the same time, some products of general-purpose analog chips have entered the reference design scheme of Qualcomm mobile phone platform and Intel notebook platform. Through this acquisition, Jingfeng Mingyuan can provide downstream customers with a more comprehensive product portfolio solution, which will help improve its technical strength and business scale.

In terms of application fields, Yichong Technology has expanded its product line to the field of automotive electronics in recent years, and the merger and acquisition will help Jingfeng Mingyuan expand the overall sales scale of the automotive field and enhance market competitiveness. After the acquisition, Jingfeng Mingyuan's automotive electronics product line was completed to complement the synergy and expand its market share. Yichong Technology is one of the few suppliers in China that has successfully mass-produced automotive intelligent headlamp driver chips, and can directly compete with international manufacturers in the automobile market, breaking the long-term monopoly of overseas manufacturers and realizing domestic substitution.

Yichong Technology has many years of experience in the design of mobile phone charging power management chips and LED driver chips for smart car headlights, while Jingfeng Mingyuan's core technology lies in AC/DC, motor control and pre-drive, high and low voltage BCD process and other fields. After the completion of this transaction, Jingfeng Mingyuan will rapidly expand the R&D team, and the two parties will communicate and integrate with each other, enhance R&D strength, and achieve technology integration and business innovation.

In terms of process integration, Jingfengming established a self-developed process team in 2014, and the fifth-generation 700V-BCD high-voltage process platform has achieved mass production, which has a very cost-effective advantage, and the sixth-generation high-voltage process technology on this basis has also been in the final stage of research and development, and the 0.18μm 40V BCD low-voltage process platform has been successfully developed and mass-produced, and the 65nm 40V BCD low-voltage process platform is under development. After the completion of the merger and integration, Yichong Technology can make full use of Jingfeng Mingyuan process platform to accelerate product development, strengthen product performance, cost and other competitive advantages, and integrate the low-pressure BCD process capabilities accumulated by Yichong Technology to provide stronger and more effective production capacity and process guarantee.

In terms of market expansion, Yichong technology products have been widely recognized by downstream customers, and various chip products are used in Samsung, Honor, Lenovo, Xiaomi, vivo, OPPO, Meizu, Transsion, Google and other brand mobile phones and their ecosystems, Meta, Dyson, Bose, Harman, B&O, Mophie, Belkin, JBL, In consumer electronics products of brands such as Nike, as well as in automotive products of brands such as BYD, Mercedes-Benz, Volkswagen, Toyota, Geely, Chery, NIO, Wenjie, Xiaopeng, Ideal, Changan, Hongqi and so on.

It can be seen that after the completion of this merger, Jingfeng Mingyuan can share customer resources with Yichong Technology, accelerate business development, improve market competitive advantage, expand the overall sales scale, and help Jingfeng Mingyuan become one of the leading analog chip companies.

The revenue growth rate of Yichong is significantly higher than that of its peers, and the strong alliance enhances its international competitiveness

Previously, in 2023, Jingfeng Mingyuan acquired the equity of Lingou Chuangxin, which brought a positive effect to the current year's performance. In 2023, Lingou Chuangxin will achieve sales revenue of 176 million yuan and net profit of 53 million yuan. Among them, the company's consolidated statement included sales revenue of 140 million yuan and net profit of 32 million yuan. In 2023, Jingfeng Mingyuan will achieve a total revenue of 1.303 billion yuan.

According to the operating data of Yichong Technology, its operating income in 2023 and from January to June 2024 increased by 45.82% and 108.46% year-on-year to 651 million yuan and 518 million yuan, and the revenue growth rate is significantly higher than that of comparable listed companies in the same industry, with strong growth. Compared with A-share power management and signal chain chip listed companies, according to the sales scale from January to June 2024, Yichong Technology has ranked among the top ten. On the same day of the official announcement of the merger and acquisition, Jingfeng Mingyuan disclosed the third quarterly report, the company achieved a total operating income of 1.088 billion yuan in the first three quarters, a year-on-year increase of 18.78%, after the transaction Jingfeng Mingyuan consolidated caliber sales scale is expected to enter the top three of A-share power management and signal chain chip listed companies.

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Note: The financial data of Yichong Technology is unaudited.

It is worth mentioning that the overseas sales turnover of Yichong Technology is increasing year by year, and it currently has local business and support teams in North America, South Korea/Japan, and Europe. At the same time, the overseas team continues to expand business opportunities by using the existing channel resources and word of mouth, and in addition to the field of consumer electronics, there is also good progress in the field of automotive front-end installation.

The differentiation and forward-looking layout of Yichong Technology in products will inevitably help Jingfeng Mingyuan eliminate involution and achieve a win-win situation in the future, obtain patents and expand production lines through integration, so as to quickly improve product quality and product variety, and rapidly amplify the brand and channel advantages.

Overall, Jingfeng Mingyuan's decision to acquire Yichong Technology is not accidental, but part of its strategic layout. This transaction will enhance Jingfeng Mingyuan's "hard technology" attributes and internationalization level, consolidate its market position and technical capabilities in the consumer field, further strengthen the layout and breakthrough of vehicle-grade products, realize the synergy with Yichong Technology in customer resources, R&D resources and global supply chain resources, expand the overall sales scale of listed companies, and enhance the international competitiveness of listed companies.

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