Shenkangjia A intends to acquire a controlling stake in Macrocrystal Microelectronics to expand the semiconductor industry

According to the previously issued suspension announcement, Shenzhen Konka A is currently in contact with Hongjing Microelectronics Liu Wei. It has been initially determined that the main counterparty to the asset purchase through the issuance of shares is Liu Wei, who directly holds 25.13% of the equity of Hongjing Microelectronics.

Hongjing Microelectronics was established in August 2009 and was listed on the New OTC Market in 2015. The company focuses on multimedia chip design, mainly focusing on audio and video collection, transmission, processing and other technical directions. The products can be used in new tablets, high-speed rail, automobiles, radio and television, medical, intelligent manufacturing and other fields.

It is headquartered in Hefei, Anhui, and has set up R&D centers in Beijing, Xi'an, Chengdu, and Silicon Valley in the United States.

According to its official website, Hongjing Microelectronics has at least 45 multimedia chip products, providing 7 major application solutions including medical endoscopes, drone aerial photography, digital instrument panels, and video collection, and provides technical services nationwide; overseas sales areas include the United Kingdom, South Korea, Israel, Germany, etc. 10Other countries and regions.

According to Huaan Securities, in 2023, Hongjing Microelectronics revenue was 286 million yuan, and the attributable net profit was 27.6393 million yuan.

Based on this calculation, its revenue has grown at a CAGR of 16.55% and its attributable net profit at a CAGR of 8.34% over the past six years.

As early as 2018, Shen Kangjia began to lay out the semiconductor business and clarified the product direction.

In 2019, Shenkangjia Semiconductor Technology gradually landed. One is the holding subsidiary Chongqing Konka, which is responsible for the MicroLED business, was formally established and successfully lit the self-developed MicroLED display and MicroLED light-emitting chip in the laboratory; the other is the mass production of the storage master chip independently developed by the holding subsidiary Hefei Kangxinwei, and the first batch of 100,000 chips was sold in December 2019.

In 2020, Shenkangjia also actively promoted the implementation of the memory chip packaging and testing base, and completed the layout of the "design + packaging and testing + sales" link in the storage industry; in 2021, the Yancheng Semiconductor Packaging and Testing Base was successfully completed and put into operation; by 2022, the packaging and testing factory's packaging yield exceeded 99.95%.

This year, Chongqing Konka Semiconductor Optoelectronics Technology Industrial Park was officially put into production. The independently developed 15um*30um MicroLED chip production yield reached 99%, and industrialization projects such as MLED direct display mass production lines were launched.

In other words, Shenzhen Konka's acquisition of the controlling stake of Hongjing Microelectronics has a strong synergistic effect and is conducive to making its own semiconductor business bigger and stronger.

In April 2024, the new "Nine Articles of the Nation" clearly proposed to "increase the reform of mergers, acquisitions and reorganizations, and take multiple measures to activate the mergers, acquisitions and reorganizations market." The following September, the China Securities Regulatory Commission issued the "Six Mergers and Acquisitions" to support the transformation and upgrading of listed companies in the direction of new productivity, encourage listed companies to strengthen industrial integration, further improve regulatory tolerance, improve the efficiency of restructuring market transactions, improve the service level of intermediaries, and strengthen supervision in accordance with the law.

In November 2024, the Finance Office of the Shenzhen Municipal Party Committee released the "Shenzhen Action Plan to Promote High-Quality Development through Mergers, Acquisitions and Reorganizations (2025-2027) (Draft for Public Comments)", proposing to "strive to help Shenzhen's industry strengthen its chains through mergers, acquisitions and reorganizations, enhance the vitality and resilience of the manufacturing industry chain, better stimulate the vitality of technological innovation, and cultivate a group of high-quality listed companies with technology as the core."

Driven by the encouragement of policies, according to incomplete statistics from the Shanghai Securities News, there will be nearly 40 cases of A-share companies acquiring semiconductor assets in 2024. Especially since the release of the new "Nine National Regulations" in April 2024, the number of cases of A-share companies acquiring semiconductor assets has increased significantly.

In December 2024, the United States launched a new round of large-scale export controls on China's semiconductor industry, including further tightening export controls on semiconductor manufacturing equipment, software tools, memory chips and other items to China, and adding 136 Chinese entities to the export control entity list.

Huajin Securities analysis believes that this is a catalyst for the domestic semiconductor chain. In the future, the localization of chip products is expected to accelerate again from both the terminal market and the supply chain.

According to the 2024 Factbook white paper released by the U.S. Semiconductor Industry Association (SIA), U.S. semiconductor companies will maintain a leading position in market share in major regions around the world in 2023. Among China's market size of nearly 154.3 billion U.S. dollars, U.S. semiconductor companies account for 53.1% of the market share, corresponding to a total market value of approximately 81.9 billion U.S. dollars. Chip localization still has huge room for growth.