Following the launch of Eight Measures for Deepening the Reform of the STAR Market to Serve Technological Innovation and New Qualitative Productivity (Hereinafter referred to as “The Eight Measures”) by China Securities Regulatory Commission (CSRC) in June, China’s semiconductor industry has embraced new opportunities for merger, acquisition and re-organization.

• Two M&A Deals Occurred in China’s Semiconductor Industry

On the heels of UNT and Novosense, two more mergers and acquisitions have recently took place in China’s semiconductor industry.

Semiconductor component manufacturer Fortune-Semi intends to acquire 100% equity of Yesemi Precision Semiconductor for no more than CNY 800 million, while power management chip and signal chain chip manufacturer Halo Micro plans to acquire a 30.91% stake in Korean chip design company Zinitix.

It’s learned that Yesemi Precision Semiconductor was founded in 2015 with a registered capital of CNY 143 million. It mainly focuses on customers of mainstream domestic 12-inch fabs, offering non-metallic component consumables based on silicon, silicon carbide, and quartz, metal component consumables based on aluminum and other metal materials, as well as services for the repair, recycling cleaning, and coating regeneration of core components from fabs.

Some of the company’s products have passed the advanced process certification of mainstream domestic 12-inch fab customers and have been produced at scale and delivered.

As per Halo Micro’s announcement, its wholly-owned subsidiary HMI plans to acquire a 30.91% stake in Zinitix for KRW 21.005 billion, becoming the largest shareholder of Zinitix and dominating its board seats.

Founded in 2000 and listed on the KOSDAQ in 2019, Zinitix is an integrated circuit design company providing touch controller chip, autofocus chip, haptic driver chip, DC/DC power management chip, touchpad module, and audio amplifier for applications such as smartphone, smartwatch, and tablet. Currently, Zinitix’s main products have entered the supply chain system of Samsung Electronics, becoming one of its suppliers for consumer electronics products like smartphones.

• China’s Semiconductor Industry Enters a Golden Period for Integration

On June 19, CSRC released the “Eight Measures”, proposing to provide stronger support for M&A, encourage STAR Market-listed companies to engage in M&A activities along the industrial chain, enhance the inclusiveness of M&A valuation, and support STAR Market-listed companies in acquiring high-quality but not yet profitable enterprises boasting cutting-edge technologies. This proposal have received vigorous responses from Chinese IC enterprises.

The “Eight Measures” policy and the active cooperation of IC companies have invigorated China’s semiconductor M&A market recently. Within less than a month, several M&A deals occurred. In addition to the aforementioned two transactions, wafer foundry UNT and chip design company Novosense also disclosed acquisition plans on June 21 and June 23, respectively.

UNT was the first company in the semiconductor field to take action following the release of the “Eight Measures.” The company plans to acquire the remaining 72.33% equity of UNT Yuezhou. As for Novosense, it announced to acquire 79.31% of Magntek’s shares for CNY 793 million. Based on Magntek’s book assets of CNY 148 million, the deal price represents a premium of around 6.78 times.

Industry sources cited by the report believe that the semiconductor industry is at the bottom of its cycle, making it a “golden period” for industry integration.

Read more

• [News] China Contributes Over 40% of U.S. Chip Equipment Makers’ Revenue despite Export Controls
• [News] China Lists Semiconductor Self-Reliance Challenges, Excluding Lithography Equipment

(Photo credit: UNT)