Shanghai Securities News｜SSE Holds Forum for Integrated Circuit Companies, Pooling Efforts to Promote Implementation of "STAR Market Eight Measures"

Translated from Shanghai Securities News

Shanghai Securities News, www.cnstock.com (reporter Qi Doudou): On July 5, the Shanghai Stock Exchange (SSE) held a special training session on the "STAR Market Eight Measures" for integrated circuit companies. More than 80 chairpersons, general managers, and other people of critical minorities from nearly 50 integrated circuit companies attended the training session. The focus of this training was to publicize the background and content of the "STAR Market Eight Measures", aiming to promote the deepened implementation of reform policies and measures for the STAR Market and accelerate the effective realization of exemplary cases.

In terms of content, this training session detailed 35 measures in eight aspects related to the "STAR Market Eight Measures", namely STAR Market's positioning of "key and core technology", issuance and consignment sales, stock and debt financing, mergers and acquisitions (M&A) and restructuring, stock ownership incentives, transactions and products, whole-chain supervision, and the market ecosystem. This training session also invited market institutions and listed companies to share the logic and valuable experience of M&A in the integrated circuit industry. Representatives from attending companies believe that high-quality industrial M&A can complement listed companies in terms of industry, technology, market, and customers, thereby enhancing the speed and quality of the listed companies' development.

Listed Companies Discuss "STAR Market Eight Measures", Pooling Wisdom for High-quality Development

After the training session, the SSE organized a special forum with the chairpersons and general managers of five leading integrated circuit companies, hoping to implement the measure of "stronger support for M&A and restructuring". Focusing on the current development status of the integrated circuit industry, the attendees engaged in in-depth discussions and exchanges on how to make good use of the "STAR Market Eight Measures" and put forward constructive opinions and suggestions.

The company representatives hold that integrated circuit industry companies listed on the STAR Market account for over 60% of the total number of A-share companies in the same industry. The introduction of the "STAR Market Eight Measures" not only clarifies the future development direction of the STAR Market but also holds significant importance for the development of the integrated circuit industry. Considering the current state of development in the integrated circuit industry, the timing is ripe for the implementation of "greater support for M&A and restructuring" as outlined in the "STAR Market Eight Measures". The integrated circuit industry is characterized by low assets and high valuations. Some high-quality M&A targets may face profitability issues due to industry cycles or ongoing research and development investments. The measures proposed in the "STAR Market Eight Measures", such as increasing valuation inclusiveness and supporting the acquisition of high-quality non-profitable enterprises, effectively address the difficulties and obstacles encountered by companies in M&A deals. This creates favorable conditions for M&A and restructuring activities in the integrated circuit industry.

According to the relevant head of SHANGHAI AWINIC TECHNOLOGY CO., LTD., there still exists a significant gap between domestic companies and global leading chip design giants in the high-end chip sector. The "STAR Market Eight Measures" supports companies in focusing on optimizing and strengthening their core business to conduct assimilation and mergers. This not only benefits listed companies by allowing them to concentrate on their core business but also helps companies with weakened market competitiveness to promptly exit through M&A and restructuring processes.

Based on the actual circumstances, company representatives presented specific opinions and suggestions on enhancing the valuation inclusiveness for M&A on the STAR Market, acquiring non-profitable target companies, establishing a "green channel" for M&A and restructuring reviews, and raising supporting funds for M&A. The relevant head of Verisilicon Microelectronics (Shanghai) Co., Ltd. suggested that at the policy level, the review process for issuing shares and purchasing assets and the standards for supporting financing be made more flexible. It was also proposed to introduce a wider range of payment tools to support M&A activities. Additionally, the company representatives also suggested advancing the "Enhancing Quality, Improving Efficiency, and Emphasizing Returns" initiative continuously and deeply, to promote the high-quality growth of companies and increase their investment value.

Representatives of attending companies said that they would actively respond to the "STAR Market Eight Measures", especially various measures for M&A and restructuring, and make full use of the newly launched institutional tools to advance the improvement of listed companies' quality. Since the introduction of the "STAR Market Eight Measures", some companies in the integrated circuit industry have taken proactive steps to engage in industrial M&A and integration. For example, on June 21, UNITED NOVA TECHNOLOGY CO., LTD. disclosed a restructuring plan, intending to acquire the remaining 72.33% equity of Xinlian Yuezhou Integrated Circuit Manufacturing (Shaoxing) Co., Ltd., a non-profitable asset, through the issuance of shares and cash payments. On June 23, SUZHOU NOVOSENSE MICROELECTRONICS CO., LTD. disclosed an acquisition announcement, proposing to acquire 79.31% stakes in MagnTek held by QST CORPORATION LIMITED through a cash transaction, with the acquisition consideration amounting to approximately RMB 800 million.

The SSE Calls for Collaborative Building of a Healthy Market Ecosystem to Ensure Effective Implementation of "STAR Market Eight Measures"

The relevant head of the SSE stated that on the occasion of the 5th anniversary of the establishment of the STAR Market, the China Securities Regulatory Commission formulated the "STAR Market Eight Measures", sending a positive signal for ongoing deepening reforms, marking a new beginning for reforms in the STAR Market. The SSE will resolutely shoulder the primary responsibility of promoting the effective implementation of the "STAR Market Eight Measures", strengthen communication and exchanges with various market participants, continuously deepen its understanding of technological development and scientific and technological (S&T) innovation laws, promote the enhancement of institutional adaptability and inclusiveness, and better support S&T innovation and the development of new quality productive forces.

The relevant head of the SSE emphasized that listed companies are the foundation of the market. The achievements of the STAR Market are ultimately reflected in the development outcomes of the companies listed on it. The SSE will firmly support listed companies in utilizing the innovative systems and tools introduced through the "STAR Market Eight Measures", further enhancing the core competitiveness. In particular, it will leverage the capital market as the primary channel for M&A and restructuring, assisting science and technology innovation-based companies in strengthening horizontal industry integration and fostering vertical synergies.

The SSE's relevant head called for a healthy market ecosystem, which includes aspects like regulated operations, inclusive corporate culture, and market-oriented mechanisms, requiring collective efforts from all market participants. It is hoped that listed companies will earnestly assume the responsibility of protecting investors' interests and safeguarding the growth of the STAR Market, jointly maintaining the stable and healthy development of the market with more practical and effective actions.

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