Since the second half of this year, with the introduction of a series of capital market and industrial development policies, many former "star" companies in the semiconductor industry have stood at a "fork in the road" between rushing to go public or being acquired. Since the beginning of this year, many well-known companies in the industry, such as Xinbang Technology, Ola Corporation, Sichuan Yichong, and Lichang Technology, have taken substantial steps towards being acquired. At the same time, there are also semiconductor companies such as Xinxin Shares, Suiyuan Technology, Boren Technology, Qinheng Microelectronics, Xinhua Semiconductor, and Shiya Technology that are centralized in the China Securities Regulatory Commission for listing guidance and filing. During the year, A-share companies frequently acquired well-known semiconductor enterprises as targets A person from a mixed signal chip company that previously applied for an IPO on the Science and Technology Innovation Board but terminated its listing process told a reporter from the Science and Technology Innovation Board Daily that their company has gone from being "not listed on the Science and Technology Innovation Board" in the past to actively seeking merger and acquisition opportunities in the near future. We have achieved success in our business model, but during the industry downturn in 2023, there will be severe losses. This year's policy is that (companies) must generate positive profits in order to go public, "he sighed. After the overall tightening of the A-share IPO stage, this chip company with nearly 20 years of development history traced back to its predecessor shattered its dream of going public. After the IPO cancellation, many companies are waiting for the automatic resumption of terms such as betting and repurchase. Even though the relevant companies have not publicly disclosed similar arrangements, their shareholders still put considerable pressure on the companies in the current market environment. The above-mentioned chip company insiders told reporters from the Science and Technology Innovation Board Daily that the company is considering being acquired mainly due to strong withdrawal demands from some old shareholders. The company can only "actively find ways in the market" and "it is best to wait for the overall environment to improve or be acquired". After the termination of an IPO, there have been many cases this year where a company took a substantial step towards being acquired. In September of this year, two semiconductor companies that had previously applied for IPOs on the Science and Technology Innovation Board, Xinbang Technology and Ora Shares, respectively planned to be integrated and acquired by two listed companies, Jinghua Microelectronics and Shuangcheng Pharmaceutical. Xinbang Technology applied for listing on the Science and Technology Innovation Board in June 2023 and was accepted, but its listing process was terminated in October 2023. This is a SoC chip design company founded by two Singaporean Chinese brothers, Zhang Hualong and Zhang Zhipeng, who graduated from top universities such as Peking University and Tsinghua University respectively. In 2022, Xinbang Technology's revenue reached 192 million yuan, with a net profit attributable to the parent company of 39.8369 million yuan. Jinghua Microelectronics plans to use no more than 140 million yuan to purchase the control rights of Xinbang Technology's intelligent home appliance control chip business assets, in order to expand the home appliance chip market. Ola Corporation applied for listing on the Science and Technology Innovation Board in 2022 and terminated its IPO on the board in May of this year. Most of the R&D backbone of the company have worked in internationally renowned semiconductor companies for many years, and their clients have covered well-known enterprises such as ZTE, Huaqin, New H3C, Nokia, etc. The company's revenue in 2023 will reach 472 million yuan. Both Ola Corporation and its acquirer, Shuangcheng Pharmaceutical, are chaired by Wang Chengdong. In this acquisition case, Shuangcheng Pharmaceutical plans to issue shares to 25 counterparties, including Ola Investment, and pay cash to purchase 100% of Ola's total shares held by them. At the same time, some well-known semiconductor companies, led by their core founders, have become the first choice for seeking new development of their own enterprises through mergers and acquisitions. For example, recently, Jingfeng Mingyuan announced its intention to acquire control of Sichuan Yichong, which has completed 15 rounds of financing. The latest two rounds of investors include Shenzhen Venture Capital, Weihao Chuangxin, Jianxin Investment, Shenzhen Capital, Geely Holding, Zhongjin Capital, NIO Capital, and other institutions. Pan Siming, the founder of Sichuan Yichong, graduated from Tsinghua University and has worked for companies such as Apple and Cisco. According to the announcement from Jingfeng Mingyuan, several counterparties in the merger and acquisition case are all holding platforms where Pan Siming serves as the executive partner. In May of this year, Dongxin Corporation announced its intention to acquire Lichang Technology. The three founders of the target company all have nearly 30 years of experience in the GPU industry. Xuan Yifang, one of the founders of Lichang Technology, expressed confidence in the synergy between Lichang and Dongxin in chip design and future products. By integrating GPU technology and storage technology to create a new architecture product of GPU+memory, advantages can be formed in terms of performance, price, and power consumption, laying a more innovative foundation for the company's competitive advantage and long-term development potential in GPU rendering and AI After the deployment of the active M&A and restructuring market in the new "National Nine Measures", the China Securities Regulatory Commission issued the "Opinions on Deepening the Reform of the M&A and Restructuring Market for Listed Companies" in September this year, proposing to support listed companies to carry out M&A and restructuring around strategic emerging industries, future industries, etc., improve regulatory inclusiveness, and better play the main channel role of the capital market in corporate M&A and restructuring. Semiconductor industry star project intensive IPO coaching and filing Star semiconductor companies are being acquired to the left and rushing towards IPOs to the right. According to the Science and Technology Innovation Board Daily, this year, companies with prominent positions in the semiconductor industry such as Xinxin Shares, Suiyuan Technology, Boren Technology, Qinheng Microelectronics, Xinhua Semiconductor, and Shiya Technology have intensively filed for listing guidance with the China Securities Regulatory Commission. Among them, it only took four months for Xinxin Shares to complete the process from coaching and filing to being accepted for application to the Science and Technology Innovation Board. The "Eight Policies for the Science and Technology Innovation Board" released in June this year proposed to strengthen the "hard technology" positioning of the board, strictly control the entrance, and also prioritize supporting "hard technology" enterprises that break through key core technologies in new industries, new formats, and new technology fields to be listed on the board, further improving the precise identification mechanism for technology-based enterprises. Requirement: "Adapt to the characteristics of high investment, long cycle, and high uncertainty in research and commercialization of enterprises related to new quality productivity, support high-quality non-profit technology-based enterprises with key core technologies, great market potential, and outstanding scientific and technological innovation attributes to be listed on the Science and Technology Innovation Board, and enhance institutional inclusiveness. A semiconductor company executive told a reporter from the Science and Technology Innovation Board Daily that innovation projects in the semiconductor field generally require large capital investment and long return cycles, and have high requirements for the pace of accepting external financing. The typical cycle from product initiation to design completion to production and manufacturing is at least 18 months, and subsequent commercial promotion to the market is required to complete the commercial closed loop. Each film production requires an investment of tens of millions of yuan, so the risk of project failure is relatively high Moreover, continuous financing leads to a relatively dispersed equity structure for most projects when they reach the stage of going public, and they also need to face shareholder pressure in the later stage. Therefore, when the industry as a whole develops to a certain stage, there is also a certain demand for policy design in the capital market, "said the above-mentioned business person. It is understood that the main products of Suiyuan Technology and Boren Technology are computing chips, while Xinxin Corporation's storage chip manufacturing business is recognized by the outside world as a project with high capital investment requirements. Meanwhile, both Xinhua Semiconductor and Shiya Technology currently have the need to expand their overseas market business. Zhang Jinwei, a partner of Fenghua Investment, stated in an interview with the Science and Technology Innovation Board Daily that currently, the A-share IPO review environment has not changed significantly and remains tight. The current focus of primary market institutions is to increase efforts to assist invested enterprises in horizontal or vertical integration. And the reason why there are many well-known projects intensively undergoing IPO counseling or application this year, Zhang Jinwei believes that on the one hand, the regulatory authorities have opened up the greenway policy for enterprises with significant scientific and technological innovation attributes. According to their observation, this year, provincial supervisory departments will gradually select a group of high-quality enterprises that undertake major national scientific research and development tasks and have international cutting-edge technology research and development capabilities, and draft a list to be submitted to the National Development and Reform Commission for filing. Although there is currently no clear guarantee that the relevant reporting companies will be able to apply, more opportunities have been given to try to apply On the other hand, starting from the second half of 2022, the overall environment of the domestic capital market has been relatively cold, and some semiconductor companies have not yet received new financing and financial support. Some companies are also facing the triggering of repurchase and betting clauses. Zhang Jinwei told reporters from the Science and Technology Innovation Board Daily that some companies urgently need to "make some big moves" at the capital level to attract new capital injections or avoid triggering terms. Recently, we have seen many companies in the market that, after reporting IPO guidance, immediately carried out large-scale equity financing actions. How do semiconductor companies choose before the "fork in the road" External factors such as policies and industries are crucial for the IPO of technology companies. The differences in these external factors may lead to completely opposite conclusions about the judgment of a project, "said Bu Rixin, a partner at Chuangdao Investment Consulting, to a reporter from the Science and Technology Innovation Board Daily. The support of policies determines a company's confidence in IPO, while industries determine a company's growth trend, all of which will affect the market's judgment of related projects. Currently, which semiconductor companies are suitable for considering mergers and acquisitions, and which ones are suitable for pursuing IPOs? Bu Rixin believes that for truly "hard technology" projects - those with clear hard innovation attributes, supported by industrial policies, and reflected in performance, IPO will inevitably be the preferred path for capitalization; For projects with large scale and IPO capabilities according to previous standards, but hindered by market conditions, capitalization can be achieved through "cross-border mergers and acquisitions"; For enterprises with strong technological attributes but still in the early stages of development, if they have sufficient primary market funding support, they can also consider cultivating them for a few years, depending on the development situation, whether to independently IPO or consider being acquired by listed companies to become an emerging business sector cultivated by listed companies. Feng Hua Investment partner Zhang Jinwei believes that the choice between being acquired or IPO should be based on the characteristics of industry development. For example, in the semiconductor field, based on industry characteristics, most material companies and component, equipment, and analog chip companies may consider mergers and acquisitions or being acquired. Single or few material, component, equipment, and analog chip companies are clearly facing the practical situation of limited market space, making it difficult to grow. If a company wants to IPO, it needs to prioritize building itself into a platform based enterprise, spanning multiple materials and categories of industries. However, such companies generally have long R&D and import cycles, and it is difficult to layout each category on their own Zhang Jinwei stated that relatively speaking, many "large" digital chip research and development companies, such as GPU, GPGPU, CPU, DPU and other projects, are more suitable for directly rushing for IPO when the basic application conditions are met. Whether before or after IPO, the main products of such enterprises generally have a longer-term growth curve, face a wider range of downstream application scenarios, and have a larger market space. By doing a good job in their main products, they can achieve significant development. Of course, after their IPO, they can also consider mergers and acquisitions of other chips, "said Zhang Jinwei. From the current development trend of the capital market, it is more difficult for companies that have experienced the termination of IPOs to re establish independent IPOs, "said Bu Rixin, a partner at Chuangdao Investment Consulting. Such companies are actually more suitable for mergers and acquisitions. Firstly, they can quickly solve the risk of repurchase and collapse caused by the withdrawal of IPOs, which triggers gambling problems; The second is to activate the existing targets in listed companies and improve the quality of existing listed companies through business transformation and upgrading. Zhang Jinwei, a partner at Fenghua Investment, believes that the success of companies that applied for "secondary" IPOs after the termination of the previous Sci Tech Innovation Board IPO depends on the specific reasons for the cancellation at that time. If the core technology and innovation attributes are repeatedly questioned by regulators, there is probably no possibility of reapplying for IPO; but if it is due to performance issues or other compliance issues, there is still an opportunity to apply for the Sci Tech Innovation Board after resolving such issues A person from a chip company listed on the Science and Technology Innovation Board stated that their team has started to search extensively for semiconductor projects that are synergistic or complementary to the company's main business this year. However, they feel that the overall valuation is still relatively high. It can be foreseen that some small and medium-sized semiconductor companies considering mergers and acquisitions may consider lowering prices and shipping to quickly recoup funds and support their higher valuation in the future.