The wave of mergers and acquisitions in the semiconductor industry will continue from 2024 to 2025.

In the last two trading days of 2024, Shenzhen Konka A (000016.SZ), Jiejie Microelectronics (300623. SZ), Liyang chip (688135. SH) has successively announced the merger and acquisition of semiconductor assets; Since the beginning of 2025, Aisen shares (688720. SH), Shuangcheng Pharmaceutical Co., Ltd. (002693. SZ) and other companies disclosed the latest progress announcements of mergers and acquisitions in accordance with regulations.

With the support of policies, the recovery of the industry and the explosion of AI demand, mergers and acquisitions in the semiconductor industry have become the hot word of the year in the capital market. In 2024, more than 40 A-share listed companies will disclose semiconductor asset mergers and acquisitions for the first time, and there will be a new merger and acquisition almost every 8 days. Not only GigaDevice (603986. SH), Changdian Technology Co., Ltd. (600584. SH), Tongfu Microelectronics (002156. SZ) and other listed companies in the industrial chain have broadened their product lines and integrated their supply chains through horizontal and vertical mergers and acquisitions; There is also AuCom International (603001. SH), Youa shares (002277. SZ), Zhizheng shares (603991. SH) and others want to acquire semiconductor assets across borders and seek transformation.

Under the tuyere, a number of semiconductor M&A concept stocks have become the "big bull stocks" of the year, such as Shuangcheng Pharmaceutical's plan to acquire Ola shares after the resumption of trading and closed 14 consecutive daily limits, Youa shares, Guangzhi Technology (300489. SZ) after the resumption of trading both harvested 8 consecutive boards, Fuller (301297. SZ) announced that after the resumption of trading in the acquisition of Fullerhua, it came out of the ...... of 6 consecutive boards

Recently, a number of companies such as Youa Co., Ltd. and Guangzhi Technology have also responded to the progress of mergers and acquisitions that investors are concerned about on the investment platform.

"This round of mergers and acquisitions in the semiconductor industry is relatively strong and has a wide coverage, which means that the industry concentration is increasing and it is beginning to reshuffle." Zhang Xiaorong, president of the Deep Science and Technology Research Institute, told the Times Weekly reporter, "For the leading companies in the industrial chain, this round of mergers and acquisitions is an important opportunity, the company can quickly expand market share, master core technologies, reduce costs, and enhance its competitiveness through mergers and acquisitions; At the same time, policy support has created favorable conditions for M&A activities. For companies with cross-border acquisitions, it is difficult to integrate after mergers and acquisitions due to differences in business models, corporate cultures and technical barriers between different industries. ”

Industrial chain mergers and acquisitions integration

This wave of mergers and acquisitions in the semiconductor industry is inseparable from policy support.

Since April 2024, new policies such as "Nine Articles", "Sixteen Policies for Science and Technology", "Eight Policies for Science and Technology Innovation Board" and "Six Policies for Mergers and Acquisitions" have been promulgated one after another, and then, in November and December, Shenzhen and Shanghai have successively announced action plans to support mergers and acquisitions and restructuring from 2025 to 2027, creating new opportunities for mergers and acquisitions of listed companies.

The semiconductor industry, which is supported by key policies, has also slowly opened the curtain of mergers and acquisitions. According to incomplete statistics from the Wind database and Times Weekly reporters, in the whole year of 2024, a total of 43 semiconductor mergers and acquisitions will be disclosed for the first time in the A-share market, of which 25 events will be released for the first time after the announcement of the "9.24" new policy.

Data source: Times Weekly reporter according to wind, listed company announcements

According to the observation of the Times Weekly reporter, the integration of the industrial chain is the highlight of this round of mergers and acquisitions, among the 43 mergers and acquisitions, 34 are asset mergers between the semiconductor industry chain (among them, semiconductor materials and analog chip listed companies are particularly active, launching 7 and 8 mergers and acquisitions respectively); In addition, 9 mergers and acquisitions were initiated by listed companies in the non-semiconductor industry.

Specifically, this round of mergers and acquisitions covers a wide range, from upstream semiconductor materials, equipment, discrete devices, to midstream chip design, wafer manufacturing, packaging and testing, all segments of the field have listed companies involved, including many head companies, such as the upstream high-end semiconductor equipment manufacturer Huahai Qingke (688120. SH), semiconductor discrete device manufacturer Jiejie Microelectronics, semiconductor sputtering target manufacturer Jiangfeng Electronics (300666. SZ）； GigaDevice, a leading domestic memory chip in the midstream, and Goodix Technology (603160.HK), a leading fingerprint recognition chip, are among the top domestic memory chips in the midstream. SH), intelligent security chip design company Xingchen Technology (301536. SZ) and so on.

From the perspective of M&A types, there are horizontal M&A to expand scale and enrich product lines; There are also vertical mergers and acquisitions to broaden the scope of business and open up the supply chain.

Huahai Qingke said that in order to enrich the company's semiconductor equipment category, it plans to spend 1.005 billion yuan to acquire 82% of the shares of Xinyu Semiconductor (Shanghai) Co., Ltd. According to Huahai Qingke's announcement on December 25, 2024, Xinyu is one of the few suppliers in China that can realize the production of large-beam ion implantation equipment. Ion implanter is one of the key equipment in the pre-process of integrated circuit manufacturing.

Huahai Qingke believes that the company can quickly realize the absorption and transformation of the core technology of ion implantation through this acquisition, complete the layout of products and business segments by leaps and bounds, and enhance the company's core competitiveness.

Another example is Liyang Chip, which plans to acquire 100% of the equity of Guoxin Micro (Chongqing) Technology Co., Ltd. to make up for the company's gap in the field of integrated circuit testing special chips; GigaDevice acquired a 70% stake in Suzhou Saixin Electronic Technology Co., Ltd. to expand the company's analog product ......

Among the many M&A cases, the largest M&A deal disclosed last year came from Fullert, which was also regarded as a "snake swallowing elephant" deal. By issuing shares and convertible corporate bonds, Fuller purchased 100% of the shares of Jiangsu Fuller Semiconductor Technology Co., Ltd. (hereinafter referred to as "Fullerhua"), a semiconductor asset under the controlling shareholder, at a price of 6.55 billion yuan, which is a manufacturer of copper-clad ceramic substrates, one of the key materials for power semiconductors.

As a pan-semiconductor equipment precision cleaning service provider, Fuller believes that this acquisition will help integrate the high-quality semiconductor industry resources within the group, promote the introduction of high-quality semiconductor parts manufacturing business, and better provide customers with high value-added comprehensive one-stop services.

The latest data shows that the profitability of Fuller is higher than that of Fuller. From January to September 2024, Fuller achieved an operating income of 1.373 billion yuan and a net profit attributable to the parent of 191 million yuan, while in the same period, Fuller achieved an operating income of 560 million yuan and a net profit attributable to the parent of 79.4229 million yuan.

In addition, the merger and acquisition amount of more than 1 billion yuan also includes Xinlian Integration-U (688469.SH), Changdian Technology, Tongfu Microelectronics and NOVOSENSE Microelectronics (688052. SH ）。 Xinlian Integration-U wants to spend 5.897 billion yuan to acquire 72.33% of the equity of Xinlian Yuezhou, Changdian Technology to acquire 80% of the equity of Shengdi Semiconductor for 668 million US dollars (equivalent to about 4.8 billion yuan), Tongfu Microelectronics to acquire 26% of the equity of Jinglong Technology for 1.378 billion yuan, and NOVOSENSE to acquire 68.28% of the shares of McGoon for 1 billion yuan.

In the selection of M&A targets, most companies carry out epitaxial M&A, and only Changchuan Technology (300604. SZ), Lion Micro (605358. SH), Sai Microelectronics (300456. SZ), Jiangfeng Electronics and a few other companies have enhanced their control over subsidiaries and deepened synergies by acquiring the remaining shares of their holding or shareholding subsidiaries.

The Times reporter noted that overseas semiconductor assets have also become the focus of this round of mergers and acquisitions of domestic enterprises, and the business of the target company mainly involves semiconductor materials, discrete devices, and design fields. Ruken Silicon plans to acquire a 70% stake in DG Technologies (DGT) Co., Ltd., whose main products are components for etching equipment; Aisen shares acquired 80% of the shares of INOFINE in Malaysia; Xidiwei acquired a total of 30.91% equity interest in Zinitix Co., Ltd., a listed Korean integrated circuit design company; Zhongjuxin-U acquired 100% equity of Heraeus Conamic UK Limited, a manufacturer of semiconductor high-purity quartz materials.

"This round of mergers and acquisitions is a development opportunity for the semiconductor industry. China's semiconductor industry is still in the development stage of catching up with foreign countries. At present, the middle and downstream integrated circuit manufacturing links are expected to break through technical barriers, and the upstream materials, equipment manufacturing and other links are relatively weak, the research and development time is long, and a large number of practitioners are needed. Judging from the experience of mergers and acquisitions of foreign semiconductor giants, some large domestic semiconductor companies can also shorten their own R&D time, reduce repeated development technology investment, integrate technical forces, and enhance international competitiveness through mergers and acquisitions of some small and medium-sized enterprises with core industry technologies at home and abroad. Professor Yu Jiuhong, deputy director of the Academic Committee of Ningbo University of Finance and Economics and a science and technology investor, told the Times Weekly reporter.

"M&A is one of the important means for the development of the semiconductor industry. M&A helps enterprises quickly acquire core technologies, expand market share, and enhance competitiveness. Foreign semiconductor giants have also achieved technology integration, market expansion and industrial chain optimization through mergers and acquisitions. Domestic enterprises can learn from the M&A experience, including selecting the right M&A target, formulating a reasonable M&A strategy, and strengthening post-M&A integration and management. Zhang Xiaorong said.

Cross-border acquisitions for transformation

In addition to the original semiconductor industry chain companies through mergers and acquisitions to fill the gap in the business territory or improve the layout of the industrial chain, with the increase in the popularity of semiconductors, many companies also set their sights on the semiconductor field last year.

In December 2024, there will be the "Wenzhou Shoe King" Aokang International cross-border acquisition of memory chip company, and then Shenzhen Kangjia A plans to acquire Hongjing Microelectronics; Prior to this, in November, Youa Co., Ltd. planned to acquire Shangyangtong, a semiconductor power device company; In October, Baiao Chemical (603360. SH) capital increase Xinhuilian and Zhizheng Co., Ltd. plan to acquire advanced packaging of semiconductor lead frame company; In September, Guangzhi Technology planned to merge and acquire Semiconductor Materials Company Pioneer Electrical Branch; In August, Shuangcheng Pharmaceutical planned to acquire the analog chip company Ola shares......

According to the Times Weekly reporter, as of now, 6 of the 9 cross-border mergers and acquisitions are still in progress. It is doubtful whether these companies can successfully cross borders, but these cross-border companies have almost invariably stirred up layers of heat waves in the secondary market after the first release of mergers and acquisitions, with the strongest performances such as 14 consecutive board Shuangcheng Pharmaceutical, 8 even board Youa shares and 6 even board Zhizheng shares.

On December 30, 2024, Shenzhen Kangjia A announced that it plans to issue shares to purchase a controlling stake in Hongjing Microelectronics Technology Co., Ltd. (hereinafter referred to as "Hongjing Microelectronics") and raise matching funds. At present, the company is in contact with Liu Wei, the actual controller of Hongjing Microelectronics, and is expected to disclose the transaction plan before January 14, 2025. It is worth mentioning that on the day of the announcement, Shenzhen Kangjia A shares were officially suspended, and on December 27, the last trading day before the suspension, the company's stock price was once up and down, with the latest market value of 13.3 billion yuan.

As one of the giants in the home appliance industry, Shenzhen Kangjia A's performance has continued to be sluggish in recent years, and the company has established a group strategy of "one axis, two wheels and three drives" in 2023, focusing on the two main businesses of consumer electronics and semiconductors. The main business of Hongjing Microelectronics, the subject of this transaction, is chip research and development, design and sales, which was listed on the New Third Board in 2015 and terminated in 2019. In August 2024, Hongjing Microelectronics completed a new IPO counseling filing and planned to be listed on the Science and Technology Innovation Board, but since then the IPO has entered a state of stagnation.

Aukang International, a former leader in the footwear industry, is also trying to find a way out through strategic transformation. The company is planning to purchase the equity of Lianhe Storage Technology (Jiangsu) Co., Ltd. (hereinafter referred to as "Lianhe Storage") by issuing shares and/or paying cash to enter the semiconductor industry. The specific transaction plan is still under discussion. The company's shares have been suspended from the opening of the market on December 24, 2024, and the stock price closed at 7.08 yuan per share on the last trading day before the suspension, with a total market value of 2.84 billion yuan.

According to the official website, the target company, Lianhe Storage, is a supplier of memory chips and solutions, headquartered in Wuxi, Jiangsu Province, with R&D centers in Seoul, Shanghai and Shenzhen. This cross-border merger and acquisition is regarded as an important attempt by Aokang International to find new growth points under the pressure of performance.

It is worth mentioning that cross-border transformation is both an opportunity and a challenge. Due to the high professional barriers in the semiconductor industry and the differences in business and management models of listed companies in different industries, many companies have mentioned the risk of mergers and acquisitions in their announcements.

For example, Baiao Chemical said in the announcement that this equity merger and acquisition is a cross-industry merger and acquisition, and due to the lack of talent and management experience in the industry where the target company is located, there are certain risks of merger and acquisition integration, including corporate culture integration, management system docking, personnel placement and incentives, etc. As the target company, how to effectively integrate it with the company's existing management system is one of the key factors for the success of the merger.

Retail giant Youa shares also announced that after the completion of the transaction, the company's main business will be expanded to high-performance semiconductor power device research and development, design and sales, the company's main business, business scale, assets and personnel have changed greatly compared with before the reorganization, the company's internal control capabilities put forward higher requirements. The listed company will further strengthen its management capabilities and improve the management and control system to adapt to the business changes and scale expansion after the restructuring based on the business characteristics of the target company.

"The continuous occurrence of cross-border mergers and acquisitions of semiconductor assets by listed companies is largely due to the huge upward trend of the entire semiconductor market. Due to the characteristics of the semiconductor industry, such as high threshold, complex process and long chain, listed companies need to not only strengthen their understanding of semiconductor technology in the process of mergers and acquisitions, but also control the management mode and financial risks, that is, the impact of the periodicity of semiconductor input and output on financial data, and pay special attention to intellectual property rights and legal risks. In general, listed companies should conduct due diligence, pay attention to the synergy and complementarity of the business of both parties, establish effective integration plans and nodes, and increase effective communication to reduce related integration risks. Zhang Yi, chief analyst of iiMedia Consulting, told a reporter from Times Weekly.

The mergers and acquisitions of the semiconductor industry are moving forward, which not only reflects the industry's thirst for technological innovation, but also shows the results of policy support and market recovery resonance, but in the vigorous historical process, the big waves are sweeping the sand, and it remains to be seen who can become the next giant.

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