Analog chips continue to be one of the big hits in the current semiconductor market.
According to data from third-party research institutions, the global analog chip market size grew from $53.1 billion in 2017 to $84.5 billion in 2022, and it is expected to reach $94.8 billion in 2023, more than 2.4 times the growth since 2012. It is anticipated that by 2024, the global analog chip market will achieve a growth of 3.7%.
In this nearly hundred billion dollar market, the Chinese market stands out. In 2023, the Chinese analog chip market size was 302.7 billion yuan, approximately $42 billion, accounting for about 40% of the total analog chip market, which is not an exaggeration to say it holds half the market share.
In this market, although there are more than 400 domestic enterprises of various sizes, the total proportion is only about 10%, and there is a considerable space for domestic substitution, which provides an objective condition for the integration of the analog chip industry.
Advertisement
In addition, since 2024, the inventory liquidation of the analog industry has come to an end. With the rapid development of the new energy vehicle market, the domestic analog chip market is facing a rare opportunity. Strengthening competitiveness through mergers and acquisitions is becoming a new trend in the industry.
Mergers and acquisitions wave
In the past year and a half, a wave of mergers and acquisitions has emerged in the domestic analog chip market, among which the most eye-catching is the acquisition of the domestic analog leader, Naxin Micro, by the magnetic sensor manufacturer, Megaon.
On the evening of June 23, 2024, Naxin Micro announced that the company intends to acquire 62.68% of the shares of Shanghai Megaon Microelectronics Co., Ltd., directly held by Shanghai Suire Technology Co., Ltd., in cash, and intends to acquire 5.60% of the shares of Megaon indirectly held by Suire Technology through Shanghai Laire Enterprise Management Partnership (Limited Partnership) in cash. In total, it will acquire 68.28% of the shares of Megaon, with a total acquisition price of 683 million yuan.
Naxin Micro stated that the company and Megaon have a business synergy foundation in terms of products, technology, market and customers, supply chain, etc. Through this transaction, in terms of products, it will help to enrich the company's magnetic encoder, magnetic switch, and other magnetic sensor product categories, complementing the company's existing magnetic sensor products and improving the company's magnetic sensor product solutions; in terms of technology, the company will utilize Megaon's various magnetic sensing technologies in planar Hall, vertical Hall, magnetoresistance effect, and other fields, actively integrate the R&D resources of both parties, and enhance the company's overall technical strength and product competitiveness; in terms of market and customers, the company and Megaon will give full play to their respective market and customer advantages, promote market and customer synergy, and further improve the company's market coverage and share in the magnetic sensor field; in terms of supply chain, by integrating the supply chain resources with Megaon, it will leverage the scale effect and further enhance the cost advantage of raw material procurement for the company and Megaon.
The acquisition of Megaon by Naxin Micro, to some extent, indicates that under the current environment, domestic analog chip manufacturers have reached a new stage of development. They not only enhance the competitiveness of products and solutions through technological innovation but also expand and improve the product line through mergers and acquisitions to achieve quality improvement and efficiency enhancement, and to become better and stronger.When we review the development history of overseas analog chip giants, we will find that in addition to continuously increasing R&D investment, they also expand their product lines through continuous mergers and acquisitions, thereby promoting the optimization of technology innovation and intellectual property rights, becoming today's well-arranged and highly profitable analog chip companies.
There are currently about 34 listed analog chip companies in China, and the number of unlisted analog chip companies far exceeds this figure. Compared with the overseas market, China's analog chip industry as a whole shows the characteristics of being numerous but not strong. Qualified analog chip enterprises merging with other high-quality enterprises can not only increase the number of parts and expand product lines, but also avoid ineffective competition and internal strife, accelerating the domestic substitution of high-end products.
It can be said that mergers and acquisitions are the necessary path for domestic analog chip enterprises to become excellent and strong. The previously mentioned case of Naixin Micro's acquisition of Megon, as one of the few domestic analog chip enterprises focusing on the automotive field, what kind of help can this acquisition bring to Naixin Micro?
Complementarity becomes the key.
First, let's understand the magnetic sensor field where the acquired company Megon is located. A magnetic sensor is a device that can convert the magnitude and changes of the magnetic field into an electrical signal, which is divided into Hall sensors and magnetoresistive sensors according to the principle.
Hall sensors mainly utilize the Hall effect, that is, when the current is perpendicular to the external magnetic field through the semiconductor, an additional electric field is generated perpendicular to the direction of the current and the magnetic field, resulting in a potential difference at both ends of the semiconductor to detect the strength of the magnetic field.
The main principle of magnetoresistive sensors is that when there is a magnetic field acting between the magnetic core and the coil, the magnetic resistance of the magnetic core will change with the magnitude and direction of the magnetic flux density. By applying the above physical effects, magnetoresistive sensor chips can accurately measure physical signals such as current, position, direction, and angle. Magnetoresistive sensors can be divided into anisotropic magnetoresistive (AMR) sensors, giant magnetoresistive (GMR) sensors, and tunnel magnetoresistive (TMR) sensors according to different principles.
According to the statistics and forecasts of third-party market research institutions, the global magnetic sensor market space in 2023 is about 2.9 billion US dollars, and it is expected to grow to 3.7 billion US dollars by 2029, with a broad market prospect. However, at present, a few international giants still dominate the market, accounting for more than 70% of the market share.
It is worth noting that in recent years, the application of magnetic sensors in the automotive market has been gradually increasing. On the one hand, electrification and intelligence have put forward higher requirements for the car itself, and the end consumers of the car are also pursuing a better driving experience. This trend has led to a continuous increase in the usage of magnetic sensors per car. According to third-party research reports, the value of magnetic sensors per car is expected to increase from 150 yuan in 2023 to 180 yuan in 2029. On the other hand, the magnetic sensors used in traditional fuel vehicles include angle, switch, linear Hall, speed, etc., while in new energy vehicles, there are more applications of magnetic current sensors, which have contributed a considerable share of growth.
According to CITIC Securities' 2023 "Automotive Sensor Series In-depth Report," the total value of magnetic sensors in a new energy vehicle is about 40-60 US dollars (20-30 US dollars each for electrification and intelligence), and if considering the module caliber, the actual value per car is even higher. It can be said that the biggest increase in magnetic sensors in the future will fall on the automotive side.For Naxin Microelectronics, magnetic sensors are an important part of its automotive domain. It is understood that the automotive-grade chips of Naxin Microelectronics have been mass-produced in a large number of mainstream car manufacturers and first-tier automotive suppliers. In the past two years, the company has also achieved significant breakthroughs in its automotive-related business: the shipment volume in the automotive electronics field in 2023 has reached 164 million units, with the revenue share in the automotive electronics field accounting for 30.95%, an increase of about 7.82 percentage points from the previous year. In the first quarter of 2024, the proportion of the automotive electronics field further increased to 35.63%, with the revenue of magnetic sensors being about 140 million RMB. At present, the shipment volume of Naxin Microelectronics' magnetic sensor products has exceeded 100 million units, and many leading manufacturers in the automotive and industrial fields have become customers of Naxin Microelectronics.
Dr. Zhao Jia, the director of the sensor product line at Naxin Microelectronics, said in an interview that as a company mainly focused on magnetic sensors, Magoan can integrate with the existing product layout of Naxin Microelectronics. Magoan's strengths are in magnetic switches, latches, and position sensors, while Naxin Microelectronics has performed well in the magnetic current sensor market, forming a complementary relationship between the two in terms of their respective advantages.
In terms of technology, both companies have their own strengths. Zhao Jia mentioned that there are four major technical routes for magnetic sensors. In terms of TMR, Naxin Microelectronics has made product layouts and has already mass-produced, while Magoan has an advantage in AMR and has been supplying for a longer time. After the acquisition, it can also enrich the technical combination of both parties.
In addition, Zhao Jia also said that in terms of market and customer side, Naxin Microelectronics mainly focuses on analog and mixed-signal chain chips, and magnetic sensors are only a part of the product combination. The customer base is more extensive, and more resources have been accumulated in leading customers, especially in the automotive market. Naxin Microelectronics maintains in-depth cooperation with leading car manufacturers and well-known domestic and foreign Tier 1 suppliers. Products related to Magoan can also find more application scenarios and market space through this.
Dr. Zhang Long, the director of the strategic investment center at Naxin Microelectronics, also answered the impact of the acquisition of the two companies. He said that Naxin Microelectronics and Magoan have a considerable overlap in the supply chain of magnetic sensors, both in wafer and packaging testing. After the acquisition, the two companies will have more advantages in supply chain collaboration, and it is expected to achieve better cost control. On the other hand, the merger can also reduce the repeated investment and development of homogenized products, fully utilize each other's sales channels, and reduce sales costs.
He believes that Naxin Microelectronics and Magoan have a well-planned layout in the main categories of magnetic sensors and their respective fields. The acquisition can also avoid fierce competition between the two companies in some areas, which will also have a certain stimulating effect on both parties' profits.
Zhang Long also pointed out that Naxin Microelectronics has been preparing for the acquisition for a long time: on the one hand, by capitalizing the company, a better foundation for the acquisition has been constructed; on the other hand, Naxin Microelectronics established the strategic investment center before going public, actively exploring and tracking investment layouts and acquisition opportunities around the strategic direction; in addition, Naxin Microelectronics has also taken the integration after the acquisition as the focus, and has been building internal organizational capabilities and IT process systems to enable the company to form a stronger acquisition integration capability.
For Naxin Microelectronics, as it gradually deepens its involvement in the automotive field, higher demands are also put forward for its sensor products and solutions, and enriching the product category is an inevitable thing to face. In addition to the strong alliance, it also provides a "reassuring pill" for Naxin Microelectronics' sensor business, and has more confidence in technology and products to do a good job in domestic substitution when facing the price reduction wave of foreign giants.
In conclusion,Mergers and acquisitions are not only the choice of Naxin Micro, but also a common idea among many analog chip manufacturers. When the market faces bottlenecks, integrating advantages in products, technology, and market through mergers and acquisitions is becoming a new trend at present.
On March 15, 2023, Jingfeng Mingyuan announced that the company intends to sign a "Purchase Asset Agreement" with Lingou Chuangxin's shareholders, GF Xinde Investment Management Co., Ltd. and Zhoushan Hezhongxin Enterprise Management Consulting Partnership (Limited Partnership), agreeing to acquire 38.87% of the equity held by the above shareholders in Lingou Chuangxin in cash. The total equity transfer payment is 250 million yuan, and after the acquisition is completed, Jingfeng Mingyuan will hold 61.61% of the equity in Lingou Chuangxin.
On January 22, 2024, Sirui Pu announced that on January 22, the company reviewed and passed the proposal to issue convertible corporate bonds and pay cash to purchase assets and raise supporting funds, intending to issue convertible corporate bonds and pay cash to 18 transaction counterparts to acquire 85.26% of the equity of Chuangxin Micro, with a purchase price of 890 million yuan. On February 6, Sirui Pu announced the acquisition of an additional 14.74% of Chuangxin Micro's shares held by Ai Yulin, achieving 100% full ownership of Chuangxin Micro after the transaction.
There is no doubt that more and more domestic analog chip manufacturers will choose mergers and acquisitions in the future.
It is worth noting that recently, the China Securities Regulatory Commission has also introduced the "Science and Technology Innovation Board Eight Articles", proposing to optimize the stock and bond financing system of listed companies on the Science and Technology Innovation Board, to establish a "green channel" for stock and bond financing and mergers and acquisitions of "hard technology" enterprises that carry out key core technology research, and to increase support for mergers and acquisitions. This is also a major benefit for the vast majority of analog chip manufacturers listed on the Science and Technology Innovation Board. We believe that in the coming period, we will see more merger and acquisition actions of listed analog chip companies, thereby further strengthening the competitiveness of domestic substitution.
Comments