Since the release of the six mergers and acquisitions, A-shares have entered a new cycle of mergers and acquisitions, and the semiconductor sector has set off a wave of mergers and acquisitions.

Last week alone (March 10~16), 4 listed semiconductor companies issued merger and acquisition announcements, including Xinxiangwei (688593. SH), NAURA (002371. SZ), Yangjie Technology (300373. SZ), Huahai Chengke (688535. SH), involving semiconductor equipment, chip design, power semiconductors, and materials.

In a single week, it is rare for the four major semiconductor sub-industries to emerge with M&A plans. Yicai noted that the above four mergers and acquisitions are all inter-industry mergers and acquisitions, and the listed company intends to use this to expand the scale of operation and give full play to business synergies. The details of the transaction vary, with some leading companies planning to buy control of the target company with cash, while others need to refinance to complete the merger. The most striking thing is that the 100 billion leader North Huachuang continues to expand on the platform, and the company plans to take two steps to win the core source micro (688037. SH), which is the first "A eats A" of semiconductors during the year. Xinxiangwei, Yangjie Technology, and Huahai Chengke all need supporting financing to complete the transaction.

Four mergers and acquisitions a week

NAURA Huachuang, a leading domestic platform-based semiconductor equipment, launched the first "A eats A" semiconductor in the year, and the company plans to take control of Xinyuan Micro in two steps to further expand the product matrix. According to the announcement, NAURA intends to use its own cash as the consideration to acquire 19.0649 million shares held by Shenyang Advanced Manufacturing Technology Industry Co., Ltd., the second largest shareholder of Xinyuan Micro, for a transaction consideration of about 1.687 billion yuan. The two parties have signed the Share Transfer Agreement on March 10.

As of the end of the third quarter of last year, NAURA had monetary funds of 11.924 billion yuan. On March 15, NAURA announced that in order to meet the capital needs of production, operation and investment, and optimize the debt structure, the company intends to publicly issue corporate bonds to professional investors, and the total scale of corporate bonds to be issued this time does not exceed 15 billion yuan.

NAURA Group's main products include etching, thin film deposition, furnace tubes, cleaning, rapid annealing and crystal growth. The main products of Xinyuan Micro include core process equipment such as gluing and developing equipment. Both parties belong to the integrated circuit equipment industry, but the product layout is different, which is complementary and conducive to the synergy of the two sides.

The remaining three listed semiconductor companies all need to complete the merger and acquisition through the issuance of shares. Specifically, Yangjie Technology plans to acquire control of Dongguan Better Electronic Technology Co., Ltd. (hereinafter referred to as "Better Electronics"), and the target company's GEM IPO will be accepted in June 2023, and the IPO application will be withdrawn in August last year. According to the prospectus of Better Electronics, from 2021 to 2023, the company's operating income will be 449 million yuan, 561 million yuan and 627 million yuan respectively, and the net profit will be about 33.9249 million yuan, 90.2517 million yuan and 110 million yuan respectively.

The revenue scale of the target companies to be acquired by Huahai Chengke and Xinxiangwei exceeds that of listed companies. Huahai Chengke, a semiconductor packaging materials manufacturer, intends to purchase 70% of the equity of Hengsuo Huawei Electronics Co., Ltd. (hereinafter referred to as "Hengsuo Huawei") by issuing shares, convertible corporate bonds and paying cash, and raise matching funds, with a transaction price of 1.12 billion yuan. If the transaction is completed, Huahai Chengke will hold 100% of the shares of Hengshu Warwick.

The main business of Hengsu Huawei is semiconductor chip packaging materials such as epoxy plastic molding materials, and the announcement shows that in 2023, the operating income of Huahai Chengke and Hengsu Huawei will be 283 million yuan and 460 million yuan respectively. In January ~ October last year, the operating income of Hengsu Huawei was 390 million yuan, and the net profit was 33.8143 million yuan. Huahai Chengke's revenue and net profit attributable to the parent company in the first three quarters of last year were 239 million yuan and 34.9167 million yuan respectively. Huahai Chengke said that after the completion of this transaction, the annual production and sales volume of the listed company in the field of semiconductor epoxy plastic molding materials is expected to exceed 25,000 tons, ranking firmly in the leading position in China and ranking second in global shipments.

After two years of inventory removal and elimination of stock participants, display chips are expected to usher in an upward cycle this year. On the evening of March 14, the domestic display chip designer Xinxiangwei threw out a merger and acquisition plan, and the supporting financing plan is similar to Huahai Chengke, which intends to acquire Shenzhen Aixiesheng Technology Co., Ltd. (hereinafter referred to as "Aixiesheng") through the issuance of private placement shares, the issuance of convertible bonds and the payment of cash, the transaction is expected to constitute a major asset restructuring, and the transaction price is to be determined.

As the inventory clearance of display chips has not yet reached the ideal level, and the large number of participants has led to low-price competition, Xinxiangwei will increase revenue without increasing profits in 2024, and the company will achieve operating income of 507 million yuan, a year-on-year increase of 5.61%, and a net profit attributable to the parent company of 8.4231 million yuan, a year-on-year decrease of 69.41%. In terms of Aixiesheng, the revenue in 2024 will be 1.267 billion yuan, the net profit attributable to the parent will be 20.5649 million yuan, and the net profit attributable to the parent company after deducting non-profits will be 41.8992 million yuan.

For the purpose of this transaction, Xinxiangwei said that the company and Aixiesheng are both in the display chip design industry, but the business focus is different, and the transaction will help the two parties to work together in product category expansion, complementary R&D advantages, supply chain and sales channel integration.

Mergers and acquisitions of semiconductor equipment, materials, and analog ICs are interesting

Throughout the development process of leading overseas semiconductor manufacturers, mergers and acquisitions are the mainstream path to expand business scale, and mergers and acquisitions will help strengthen the integration of market, technology, capital and other resources, form a scale effect, promote industrial chain synergy and complementary advantages, and enhance the overall competitiveness of the industry.

Recently, the process of mergers and acquisitions in domestic semiconductor equipment, materials, analog chips and other industries has accelerated, which means that the sub-industries have entered a new stage of development. Analysts interviewed by Yicai and heads of listed semiconductor companies believe that this round of domestic semiconductor mergers and acquisitions is driven by many factors.

First of all, the policy clearly supports technology companies to play industrial synergies through mergers and acquisitions. Secondly, since the third quarter of 2022, the global semiconductor industry has entered a downward cycle of prosperity for more than a year and a half, and the industry prosperity has gradually improved since last year, the demand of some consumer electronics industries has recovered, and AI/automotive and other end-side application innovations have continued.

A TMT analyst in East China told reporters that the current round of semiconductor cycle prosperity is far from the peak, and listed companies have completed mergers and acquisitions at this time, which is expected to open up performance growth space with the upward demand, and it is expected that more mergers and acquisitions will emerge in the materials, equipment and chip design links of the semiconductor industry chain in the future. "Materials and equipment are highly concentrated in the global competitive pattern, domestic manufacturers after the last 5 ~ 6 years of development, has a certain business scale, research and development capabilities, financial strength and customer accumulation, market share will only become more and more concentrated to the head, new participants and smaller manufacturers or mergers and acquisitions or exit from the competition." said the aforementioned analyst.

In addition to equipment and materials, the industry believes that the domestic analog chip industry has a large space for mergers and acquisitions. "Different from digital chips, analog chips have many material numbers and wide applications, and more emphasis is placed on product stability, power, energy consumption and other indicators than the advancement of the manufacturing process. There are more than 1,000 product categories in the head factory of domestic analog chip manufacturers, and the part number of Texas Instruments in the United States is tens of thousands, and the company has implemented dozens of mergers and acquisitions and divestitures. With policy support, domestic analog chip companies are expected to open up a growth path through extension mergers and acquisitions. The aforementioned analyst added. According to incomplete statistics from the first financial network, since the release of the policy, NOVOSENSE (688052. SH), Nanxin Technology (688484. SH), Jingfeng Mingyuan (688368. SH), Xi Diwei (688173. SH), SRP (688536. SH) and many other analog IC manufacturers have thrown out mergers and acquisitions.

Haitong Securities Research Report believes that the merger and acquisition of semiconductor equipment is to expand product lines and obtain more niche and innovative technologies; The merger and acquisition of the material link is to realize the continuous improvement of process know-how; Analog IC mergers and acquisitions to achieve in-depth business development and strengthen product lines. Due to the high threshold characteristics of the simulation industry, such as slow product iteration, long life cycle, weak path dependence characteristics, long-term accumulation of experience, and complex downstream application scenarios, the industry market pattern is relatively stable due to the continuous mergers and acquisitions of leading manufacturers to expand product lines, and the market share of the top 10 manufacturers shows a fluctuating upward trend, and the stronger ones are becoming stronger.