Behind Galaxy Microelectronics' 20CM limit-up after resumption: acquiring Hengtaike to enter medium-high voltage power semiconductors

Galaxy Microelectronics (688689.SH), after a suspension of more than half a month, resumed trading today upon disclosing its restructuring plan. It intends to acquire all equity of Hengtaike Semiconductor from three shareholders: Shanghai Zhineng Hengxin Industrial Electronics Co., Ltd., Gongqingcheng Mingnuo Investment Partnership (LP), and Tianmu Yulin (Shanghai) Technology Co., Ltd., via share issuance, and simultaneously raise supporting funds.

On the resumption day, the stock hit the 20CM limit-up, closing at 55.88 yuan per share, with a total market cap of about 7.2 billion yuan and a turnover rate of only 1.21%. The limit-up order volume reached 291 million shares, 185 times the day's trading volume, corresponding to over 1.5 billion yuan in funds—a strong market scramble for the stock.

Amid the high prosperity cycle of the power semiconductor industry, the market has given a positive expectation for Galaxy Microelectronics to enter the mid-to-high-end track of medium-high voltage power semiconductors via acquisition. However, this acquisition still has multiple controversies, including insider trading allegations from unusual stock price surges before the suspension, the yet-to-be-determined target valuation, and potential large goodwill pressure in the future.

Jianghan, a senior researcher at Pangu Think Tank, said the biggest integration challenge in this transaction lies in the fine management of product lines and customers. After Hengtaike is merged, the product count will exceed 1,000, significantly increasing the complexity of customer management and capacity allocation. Second, core technologies are highly tied to the R&D team. Without reasonable equity incentives and non-compete clauses, there may be risks of technology loss and goodwill impairment.

Aiming to 'fill shortboards' via M&A, but technological leap still faces real barriers

Galaxy Microelectronics' acquisition of Hengtaike is an industrial M&A aimed at complementing weak links and enhancing synergy. After the transaction is completed, the company is expected to quickly fill its technological gap in medium-high voltage power semiconductors, fill the gap in high-end products, and improve the overall product matrix.

As a semiconductor discrete device company listed on the STAR Market in 2021, Galaxy Microelectronics has long relied on small-signal devices and low-voltage power devices as its core profit base. However, its layout in high-voltage MOSFETs, IGBTs, SiC, and other high-end areas has been relatively slow. Disclosed technological breakthroughs have not yet translated into actual performance, limiting its penetration into high-end markets such as automotive electronics.

Industry-wise, international giants like Infineon, ON Semiconductor, and STMicroelectronics have built full-chain technological loops covering materials, processes, and manufacturing. Domestic IDM leaders like Silan Microelectronics and Yangjie Technology have also achieved mass production of 8-inch high-voltage MOS and IGBTs. The industry's leading capacity continues to be released, and the window for latecomers is narrowing.

Against this backdrop, Hengtaike has become a key lever for Galaxy Microelectronics to break through technological bottlenecks. According to the restructuring plan, Hengtaike is a national-level specialized and new 'Little Giant' company, mainly engaged in the research, development, and sales of power semiconductor products. Its products are used in various power supplies, lithium battery protection, brushless motors, new energy, E-car (OBC, electronic control), etc. Hengtaike possesses industry-leading medium-voltage SGT MOSFET technology and high-voltage SuperJunction technology. Its medium-high voltage SGT MOSFETs in the 150V-200V range have reached domestic top-tier levels and can directly Pin-to-Pin replace Infineon's medium-voltage series products.

This transaction is an integration of 'Fabless design + IDM manufacturing'. Galaxy Microelectronics has mature chip manufacturing capacity but lacks high-end design capabilities; Hengtaike has top-notch design technology but no own production lines, having long been constrained by foundry capacity and cost volatility. There is complementarity in business, but synergy effects depend on subsequent integration implementation.

Zhang Jiaming, General Manager of the Investment Department at Guangzhou Ruizhi Venture Capital Management Co., Ltd., believes that the biggest advantage of M&A for small and medium-sized companies is shortening the development time window. Industry leaders typically take decades to build an industry chain synergy system, while smaller companies can quickly form a preliminary all-chain synergy through precise M&A, enhancing overall strength.

However, he also noted that the integration risks for smaller companies are undoubtedly the biggest challenge. Differences in organizational structure, corporate culture, team integration, and R&D paths can be significant. Only through fine management to achieve advantage integration and reduce internal friction can synergy drive strategy implementation.

Valuation fog and capital pressure: final pricing and performance delivery are key

As market competition intensifies, potential risks of this acquisition cannot be overlooked. The risk warning in the plan mentions that Hengtaike will face two-way competitive pressure from international giants and domestic emerging companies. If the global macroeconomy weakens, downstream terminal demand slows, or the semiconductor industry experiences a deep or sustained downturn, Hengtaike's operating performance could be directly impacted.

More fundamental uncertainty lies in the final valuation and consideration not yet being finalized. As of the plan signing date, Hengtaike's audit and valuation work are still underway, and the transaction price has not been disclosed. The share issuance price for this transaction is 28.48 yuan per share, and the lock-up period for the target's shares is 36 months. The raised supporting funds will be used to pay transaction taxes, intermediary fees, target project construction, and supplement the listed company's working capital and repay debts.

Unaudited data show that Hengtaike's revenue for 2024 and 2025 was 206 million yuan and 193 million yuan, respectively; net profit attributable to the parent was 32.2325 million yuan and 35.718 million yuan, showing stable profit growth. As of the end of 2025, Hengtaike's parent company shareholder equity was only 416 million yuan, indicating significant asset-light characteristics.

When discussing valuation, Jianghan said that the core value of asset-light semiconductor design companies lies in intangible assets such as IP cores and R&D teams. Traditional PE/PB models often fail due to large profit fluctuations and high initial investment. A reasonable valuation can be based on a multi-stage discounted cash flow (DCF) model, cross-validated with relative valuation methods, while incorporating qualitative factors like technology iteration risks and downstream application cyclicality into quantitative considerations to prudently judge whether there is a premium bubble.

From the listed company's fundamentals, Galaxy Microelectronics' net profit attributed to the parent declined year-on-year from 2022 to 2023. In 2024, the company achieved revenue of 909 million yuan, up 30.75% year-on-year; net profit attrib. to parent was 71.8742 million yuan, up only 12.21% year-on-year. In 2025, growth momentum further slowed, with full-year revenue of 1.05 billion yuan, up 15.46% year-on-year; net profit attrib. to parent was 79.9047 million yuan, with year-on-year growth falling to 11.17%, indicating overall sluggish growth.

On the capital side, Galaxy Microelectronics' monetary capital at the end of 2025 was only 137 million yuan, down 44.65% year-on-year. Operating cash flow weakened year by year; last year, net operating cash inflow was 43.7501 million yuan, down 34.73% year-on-year, related to factors such as longer customer payment cycles and increased inventory.

A private equity professional said that whether the acquisition can realize cyclical dividends depends not on the transaction's completion but on the consolidation timeline and synergy delivery. Hengtaike has stable revenue and profit, and after closing and consolidation, it can boost the listed company's performance. However, both companies are relatively small, and whether they can achieve a '1+1>2' synergy effect remains uncertain. The biggest risk is that a high premium may create significant goodwill; if subsequent performance falls short, goodwill impairment will erode the listed company's profits.

He further noted that while the market is enthusiastic about semiconductor companies acquiring to shift to high-end tracks, the real test lies not in short-term prosperity but in long-term performance delivery and integration effectiveness after the M&A.

Suspicious stock price movement before suspension attracts attention: company responds that no violation occurred

Additionally, the stock price movement before the trading suspension has raised questions about insider information leakage. Before the suspension announcement, on June 10 and 11, Galaxy Microelectronics' stock suddenly surged, cumulatively rising nearly 19% over two trading days with significantly increased volume; during the same period, the semiconductor industry index rose only 2.70%, deviating significantly from the industry trend.

The company issued a statement saying that the relevant parties involved in this transaction have no insider information leakage or insider trading violations.

Regarding market concerns, Blue Whale News called the company's board office on June 29 but received no reply as of press time.