Recently, Shanghai Silicon Industry (688126. SH) announced that the company is planning to purchase minority stakes in Shanghai Xinsheng Jingtou Semiconductor Technology Co., Ltd., Shanghai Xinsheng Jinko Semiconductor Technology Co., Ltd., and Shanghai Xinsheng Jingrui Semiconductor Technology Co., Ltd. by issuing shares and paying cash.

Also in February, Zhichun Technology (603690. SH) announced that the company is planning to purchase a controlling stake in Guizhou Weidun Crystal Phosphorus Electronic Materials Co., Ltd. (hereinafter referred to as "Wittun Crystal Phosphorus") through a combination of issuing shares and paying cash.

According to incomplete statistics from the 21st Century Business Herald reporter, since the fourth quarter of 2024, there have been 9 mergers and acquisitions in the semiconductor industry in Shanghai, involving semiconductor design, materials, and equipment.

Guo Hao, director of the M&A Department of Yunxiu Capital, told reporters that the history of the semiconductor industry is, to a certain extent, a history of mergers and acquisitions. From the perspective of foreign experience, semiconductor design giants Ti and ADI have gradually formed a rich product line through continuous mergers and acquisitions, while semiconductor materials will continue to carry out mergers and acquisitions due to the relatively small market space of a single material and the cyclical nature of semiconductor equipment.

Horizontal and vertical mergers and acquisitions are frequent

Business expansion and corporate growth through epitaxial mergers and acquisitions has always been one of the growth paths for semiconductor companies.

The proposed purchase of a controlling stake in Witton Crystal Phosphorus is a vertical merger and acquisition between the upstream and downstream of the industrial chain: Pure Technology is a high-tech enterprise with semiconductor equipment as its core business, and Witton Crystal Phosphorus is a professional electronic material integration supplier. Through the acquisition, Zhichun Technology can strengthen its control over upstream raw materials.

Judging from the M&A cases of Shanghai semiconductors since the fourth quarter of 2024, there are also horizontal M&A for the purpose of expanding product lines.

Horizontal mergers and acquisitions are dominated by chip design companies, such as Jingfeng Mingyuan (688368. SH) and Sichuan Yichong Technology Co., Ltd. are both enterprises in the field of analog and mixed-signal chip design, and can form complementary relationships in terms of customer resources, technology accumulation, and supply chain. Another example, Nanxin Technology (688484. Zhuhai Shengsheng Microelectronics Co., Ltd. is mainly engaged in the R&D, production and sales of RISC-V processors, POWER MCU microcontroller chips and supporting power management chips.

For the mergers and acquisitions of analog IC enterprises, Haitong Securities research pointed out that there are three main logics for the mergers and acquisitions of analog IC design enterprises: first, the synergy of business, which can promote the horizontal expansion of the company's main products and the in-depth development of market business, continue to strengthen the business and expand the product catalog; The second is the complementarity of market and customer resources, such as being able to supplement the needs of existing customers for other segments; The third is product R&D and closed-loop capabilities, for example, the target team has a certain sales scale and R&D construction capabilities, and the products have a certain differentiated competitiveness.

There are also semiconductor equipment companies that plan to carry out horizontal mergers and acquisitions: Huahai Qingke (688120. SH) intends to acquire the remaining 82% equity of its shareholding subsidiary, Xinyu Semiconductor (Shanghai) Co., Ltd., and/or Huahai Qingke (Shanghai) Semiconductor Co., Ltd., a wholly-owned subsidiary of the Company, which will further increase investment in integrated circuit ion implantation equipment products.

In addition, M&A in Shanghai's semiconductor industry has also seen the emergence of cross-industry M&A cases. Based on the strategic planning and development needs of semiconductor business, the chemical company Baiao Chemical (603360. SH) plans to increase its capital by RMB100 million with its wholly-owned subsidiary, Shanghai Xinaohua Technology Co., Ltd., and hold 10.4822% of the equity after the capital increase.

"The mergers and acquisitions of the semiconductor industry are an important model for enterprises in the industry to join forces, enrich their own capabilities, and find further development, and it is an inevitable choice for the development of the industry to a certain stage." Guo Hao suggested that at present, the primary market and IPO are cold, and mergers and acquisitions have become an important way for some companies to exit. Semiconductor companies can focus on their core business, actively interact with market-oriented institutions, and actively seek transactional opportunities for mergers and acquisitions.

Establishment of buyout funds

At the same time, buyout funds have also quietly emerged.

On the evening of February 11, Xinxiangwei (688593. SH) announced that it plans to jointly establish a new display industry M&A fund with Guoke Oriental (Shanghai) Private Equity Fund Management Co., Ltd., with a total scale of not less than 402 million yuan. The fund will focus on the national development strategy of integrated circuits, focus on the chip industry and invest with industrial mergers and acquisitions as the main goal, and invest in targets with innovation, growth and platform value.

Prior to this, in October 2024, the second phase of the Shanghai Semiconductor Equipment Materials Fund (hereinafter referred to as the "second phase fund"), with a total scale of more than 2.1 billion yuan, completed the second level of fundraising.

According to Li Yongjun, chairman of Shanghai Semiconductor Equipment Materials, the second phase of the fund team has been deeply cultivated and laid out extensively around the upstream and downstream of the semiconductor industry chain for a long time, and the team will go all out, uphold the concept of value investment, be the patient capital of the industry, and invest in cultivating a number of leading enterprises in subdivided fields through investment incubation, domestic and foreign mergers and acquisitions, etc., to promote domestic integrated circuit enterprises to become bigger and stronger.

Guo Hao believes that the semiconductor M&A fund provides sufficient ammunition for the semiconductor M&A market and activates the semiconductor M&A market, and the M&A fund will be an important part of the semiconductor market and an important participant in accelerating industry integration in the future.

In addition, in December 2024, Shanghai issued the "Shanghai Action Plan for Supporting the M&A and Restructuring of Listed Companies (2025-2027)", which clearly states that it will make good use of the 10 billion yuan integrated circuit design industry M&A fund, and strive to land a number of representative M&A cases in key industries by 2027.

China Development Bank Securities pointed out that semiconductors belong to an industry with extremely high technical and financial barriers, and the characteristics of the strong Hengqiang are particularly significant, and mergers and acquisitions will help strengthen the integration of market, technology, capital and other resources, form a scale effect, and promote the synergy and complementary advantages of the industrial chain, so as to enhance the overall competitiveness of the industry; At the same time, enterprises in the semiconductor industry generally invest heavily in R&D and have a long return on investment cycle, and the new M&A policy clearly liberalizes the mergers and acquisitions of unprofitable assets, which will further support the efficient acquisition of high-quality assets by leading enterprises in the industry.