M&A Integration Accelerates as SSE STAR Market Fuels Innovation in the Integrated Circuit Industry

Translated from Shanghai Securities News, Li Xingcai

Since the release of the "Eight Measures" in 2024, integrated circuit companies on the SSE STAR Market have witnessed a wave of mergers and acquisitions (M&A). Companies such as Hygon Information Technology Co., Ltd. and JoulWatt Technology Co., Ltd. have intensively disclosed acquisition plans, propelling industrial integration into the fast track. Currently, the sector's 119 companies span the entire industrial chain—from chip design and wafer foundry to packaging and testing—accounting for half of similar A-share companies and forming a fully functional industrial ecosystem.

M&A Integration Strengthens Industrial Competitiveness

Following the Eight Measures' explicit support for M&A, differentiated valuation designs have emerged as a typical innovation. The first transaction of 3peak Incorporated to acquire Shenzhen ICM-Semi Microelectronics Co., Ltd. adopted a "base valuation + performance commitment" model, utilizing convertible bonds to balance the interests of both parties. This model has since been replicated in cases such as Southchip Semiconductor Technology Co., Ltd., providing a template for integration during industry downturns. United Nova Technology Co., Ltd.'s acquisition of unprofitable assets from Xinlian Yuezhou Integrated Circuit Manufacturing (Shaoxing) Co., Ltd. for 5.897 billion Yuan marks a pioneering move for the SSE STAR Market in acquiring quality "hard technology" companies. Other cases include Shanghai Bright Power Semiconductor Co., Ltd. acquiring Sichuan E-Charging Technology Co., Ltd. for 3.283 billion Yuan and National Silicon Industry Group Co., Ltd. acquiring minority stakes in its subsidiaries for 7.04 billion Yuan, highlighting the capital market's tolerance for unprofitable sci-tech assets. The SSE STAR Market provides capital support for semiconductor enterprises characterized by long cycles and heavy investment through dual channels of IPOs and M&A.

Innovative R&D Enhances Technological Competitiveness

The acceleration of M&A, combined with increased R&D investment, has significantly enhanced the technological competitiveness of enterprises. Loongson Technology Corporation Limited's general-purpose CPU and server chips have reached mainstream market standards, with its LoongArch gradually overcoming ecosystem barriers. In 2024, 3peak Incorporated increased its R&D investment by 4.1%, launching over 10 new products in areas such as signal chains and power management chips, resulting in a 57.7% year-on-year increase in sales. BIWIN Storage Technology Company Limited, adopting a "self-developed master control + advanced packaging and testing" strategy, has entered the AI terminal market, offering products for scenarios including AI smartphones and smart glasses, thus forming a differentiated competitive advantage. Consequently, the sector's performance has improved: the Q1 2025 report indicated that over 110 companies generated revenues of 72.182 billion Yuan (up by 24%) and a net profit of 4.479 billion Yuan (up by 73%), with remarkable performances in chip design, equipment, and manufacturing.

Market Recovery Adds New Momentum for Operations

The overseas market has become a new growth driver. 3peak Incorporated has established localized teams in Singapore and Europe and the U.S. to pave the way for product introductions through audits of leading clients in automotive electronics. Companies such as Suzhou Novosense Microelectronics Co., Ltd. are planning to list on the HKEX to raise funds for expanding overseas operations. BIWIN Storage Technology Company Limited anticipates that demand for AI computing power will drive growth in server storage and that an increase in edge AI penetration will lead NAND Flash prices to rebound starting in Q2, and expects revenues from its AI glasses-related products to grow by over 500% in 2025. Enterprises are generally optimistic about the market in the second half of the year, believing that industry recovery, coupled with their technological upgrades and global layouts, will drive continued performance improvements.

From innovative M&A models to breakthroughs in technological R&D, from capital empowerment to market expansion, the SSE STAR Market is supporting the integrated circuit industry in accelerating along the path of self-controllability through comprehensive chain support. With the release of demands from areas such as AI and the Internet of Things, the sector is expected to achieve a new leap forward in industrial integration and technological iteration.

The above information is provided for reference purposes only and does not constitute investment advice.