Behind the 20% Daily Limit After Resumption: Galaxy Microelectronics' M&A Breakthrough in High-End Power Semiconductor

Galaxy Microelectronics (688689.SH), after a half-month suspension, disclosed its restructuring plan and resumed trading today. The company plans to acquire 100% of Hengtaike Semiconductor from three shareholders—Shanghai Zhineng Hengxin Industrial Electronics Co., Ltd., Gongqingcheng Mingnuo Investment Partnership (Limited Partnership), and Tianmu Yulin (Shanghai) Technology Co., Ltd.—via share issuance, and concurrently raise supporting funds.

On the resumption day, the stock hit the 20% daily limit, closing at 55.88 yuan per share, with market cap rising to about 7.2 billion yuan and turnover rate of only 1.21%. The buy order queue reached 291 million shares, 185 times the day's trading volume, with corresponding funds exceeding 1.5 billion yuan.

In the high-cycle power semiconductor industry, the market gave a positive outlook on the company's M&A entry into the medium-to-high-voltage power semiconductor track. However, the M&A faces multiple controversies: insider trading allegations due to abnormal stock price surge before suspension, the unsettled valuation of the target, and potential large goodwill pressure in the future, all challenging the integration outlook.

Core Integration Challenges: Product Line, Customer, and R&D Team Synergy

Pangu Think Tank senior researcher Jiang Han said the biggest integration challenge is fine-grained management of product lines and customers. With over 700 Hengtaike products added, the total exceeds 1,000, complicating customer management and capacity allocation.

Second, core technology is highly tied to the R&D team. Without reasonable equity incentives and non-compete clauses, there is a risk of technology loss and goodwill impairment.

"Fill the Gap" Industrial M&A: Real Barriers in Medium-to-High-Voltage Power Semiconductor Technology

Compared to some listed companies' cross-border M&A with no synergy with their main business, Galaxy Microelectronics' acquisition of Hengtaike is an industrial M&A that fills gaps and emphasizes synergy. After the deal, the company is expected to quickly fill its medium-to-high-voltage power semiconductor technology gap, fill high-end product blanks, and complete its product matrix.

Galaxy Microelectronics has long relied on small-signal devices and low-voltage power devices as its business base, but has lagged in high-end areas such as high-voltage MOSFETs, IGBTs, and silicon carbide (SiC). Disclosed technological breakthroughs have not translated into actual performance, limiting the company's penetration into high-end markets like automotive electronics.

As leading industry capacity continues to be released and the window for latecomers narrows, Hengtaike has become an important tool for the company to break through technical bottlenecks. According to the restructuring plan, Hengtaike is a national-level specialized and new "little giant" enterprise, mainly engaged in the research, development, and sales of power semiconductor products, applied in power supplies, lithium battery protection, brushless motors, new energy, and E-car (OBC, electric control) fields.

Hengtaike has industry-leading medium-voltage SGT MOSFET technology and high-voltage SuperJunction technology. Its 150V-200V range medium-to-high-voltage SGT MOSFETs have reached domestic top-level standards, capable of pin-to-pin replacement of Infineon's medium-voltage series products.

The transaction is described as a "Fabless design + IDM manufacturing" industry chain integration path: Galaxy Microelectronics has mature chip manufacturing capacity but lacks high-end design capabilities; Hengtaike has top design technology but no own production lines, long constrained by foundry capacity and cost fluctuations. There is complementary space between the two businesses, but whether synergy materializes depends on subsequent integration.

Valuation Fog and Capital Pressure: Final Pricing and Synergy Realization Uncertain

Galaxy Microelectronics warned in the plan that Hengtaike will face two-way competitive pressure from international giants and domestic new companies; if the global economy weakens, downstream demand growth slows, or the semiconductor industry experiences deep, sustained downturn, Hengtaike's performance will be affected.

More core uncertainty is that the final valuation and consideration are not yet determined. As of the plan signing date, audit and evaluation of Hengtaike are still underway, and the transaction price has not been disclosed. The share issuance price is 28.48 yuan per share; shares received by transaction counterparties are locked for 36 months; the raised funds will be used to pay transaction taxes, intermediary fees, target project construction, and replenish working capital and repay debts.

Unaudited data show Hengtaike's revenue in 2024 and 2025 was 206 million yuan and 193 million yuan, respectively; net profit attributable to parent was 32.2325 million yuan and 35.718 million yuan, showing stable growth. As of end-2025, Hengtaike's parent company equity was only 416 million yuan, reflecting a light asset nature.

Jiang Han pointed out that the valuation of light-asset semiconductor design companies is core to intangible assets such as IP cores and R&D teams. Traditional PE/PB models may fail when profits fluctuate and early investment is high. Reasonable valuation can be based on a multi-stage discounted cash flow (DCF) model, cross-validated with relative valuation methods, incorporating qualitative factors like technology iteration risk and downstream application cyclicality.

From the listed company's fundamentals, Galaxy Microelectronics' net profit attributable to parent declined year-on-year in 2022 and 2023. In 2024, revenue was 909 million yuan, up 30.75%; net profit was 71.8742 million yuan, up only 12.21%. In 2025, revenue was 1.050 billion yuan, up 15.46%; net profit was 79.9047 million yuan, growth slowing to 11.17%.

On the capital side, financial pressure increased. As of end-2025, cash and cash equivalents were only 137 million yuan, down 44.65% year-on-year. Operating cash flow net inflow was 43.7501 million yuan, down 34.73%.

A private equity fund insider believed the key to M&A is not the deal closing but the consolidation rhythm and synergy realization. After Hengtaike is consolidated, it may boost the listed company's performance, but both companies are small, and whether "1+1>2" can be achieved remains uncertain. The biggest risk is that high-premium acquisition creates large goodwill; if subsequent performance falls short, goodwill impairment will erode profits.

Pre-Suspension Stock Price Anomaly Draws Attention: Company Responds No Violation

In addition, the abnormal stock price movement before suspension raised market concerns about insider information leakage. Before the suspension announcement, Galaxy Microelectronics shares surged on June 10-11, with a cumulative gain of nearly 19% in two days and significantly increased volume; the semiconductor industry index rose only 2.70% in the same period, deviating significantly from the industry.

The company stated that the relevant parties involved in the transaction did not have insider information leakage, insider trading, or other violations. In response to market concerns, on June 29, Blue Whale News called Galaxy Microelectronics' board office but received no reply as of press time.