Behind the '20CM' Limit Up After Resumption: Galaxy Microelectronics Plans to Acquire Hentek to Break into Mid-High Voltage Power Semiconductors

Galaxy Microelectronics (688689.SH), which had been suspended for more than half a month, disclosed a restructuring plan yesterday and resumed trading today. The company plans to acquire 100% of Hentek Semiconductor from three shareholders—Shanghai Zhineng Hengxin Industrial Electronics Co., Ltd., Gongqing Chengming Investment Partnership (Limited Partnership), and Tianmu Yulin (Shanghai) Technology Co., Ltd.—by issuing shares, and simultaneously raise supporting funds.

On the resumption day, the company's shares hit the '20CM' limit up, closing at 55.88 yuan per share, with a total market capitalization of about 7.2 billion yuan. The turnover rate was only 1.21%, and the limit-up buy orders reached 291 million shares, 185 times the day's trading volume, with corresponding funds exceeding 1.5 billion yuan, indicating strong buying sentiment.

Amid the high prosperity cycle of the power semiconductor industry, the market has given a positive outlook to the plan of this established discrete device manufacturer to enter the mid-high voltage power semiconductor sector through acquisition. However, there remain multiple controversies: insider trading allegations due to abnormal stock price rise before suspension, undetermined valuation of the target, and potential large goodwill pressure in the future, all adding uncertainty to this industrial integration.

Jiang Han, a senior researcher at Pangu Think Tank, said that the biggest integration challenge lies in the fine management of product lines and customers. After adding Hentek's more than 700 products, the total will exceed 1,000, greatly increasing the complexity of customer management and capacity allocation. Secondly, core technology is highly tied to the R&D team; without reasonable equity incentives and non-compete clauses, there could be a risk of technology loss and goodwill impairment.

Intended to 'fill shortcomings' through acquisition, technology leap still faces real barriers

Compared with some cross-border acquisitions by listed companies that lack synergy with their main business, Galaxy Microelectronics' acquisition of Hentek is a typical industry merger for complementary advantages and synergy. After the transaction is completed, the company is expected to quickly fill its technical shortcomings in mid-high voltage power semiconductors, fill the gap in high-end products, and improve the overall product matrix.

Galaxy Microelectronics has long relied on small-signal devices and low-voltage power devices as its core performance base. However, its layout in high-end areas such as high-voltage MOSFETs, IGBTs, and silicon carbide (SiC) has been slow. The disclosed technical breakthroughs have not yet translated into actual performance, limiting the company's penetration into high-end markets such as automotive electronics.

Currently, international giants such as Infineon, ON Semiconductor, and STMicroelectronics have built full-chain technical closed 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 MOSFETs and IGBTs. The head capacity continues to be released, and the window for latecomers is narrowing.

Hentek has become the key for Galaxy Microelectronics to try to break through technical bottlenecks. According to the restructuring plan, Hentek is a national-level specialized and new 'little giant' enterprise mainly engaged in the research, development, and sales of power semiconductor products. Its products are widely used in various power supplies, lithium battery protection, brushless motors, new energy, E-car (OBC, electric control), and other fields. Hentek has industry-leading medium-voltage SGT MOSFET technology and high-voltage Super Junction technology. Its mid-to-high voltage SGT MOSFETs in the 150V-200V range have reached domestic top-tier levels and can directly pin-to-pin replace Infineon's mid-voltage series products.

This transaction is a typical 'Fabless design + IDM manufacturing' industrial chain integration. Galaxy Microelectronics has mature chip manufacturing capacity but lacks high-end design capability; Hentek has top-tier design technology but no own production line, long constrained by foundry capacity and cost fluctuations. The two sides have complementary business potential, but whether synergies materialize depends on actual integration implementation.

Zhang Jiaming, general manager of the investment department at Guangzhou Ruizhi Venture Capital Management Co., Ltd., said that for small and medium-sized companies, the biggest advantage of M&A is that it greatly shortens the development window. Industry leaders often take decades to build an industrial chain synergy system, while small and medium-sized companies can initially form a full-chain synergy prototype through precise M&A, enhancing comprehensive strength in a complex competitive environment.

Zhang pointed out that small and medium-sized companies also face many risks, of which integration risk is undoubtedly the biggest challenge. Two or more companies often differ in organizational structure, corporate culture, team integration, and technology R&D paths. Only through fine management to deeply integrate advantages and reduce internal friction can they form synergy to drive strategy.

Valuation fog and funding pressure: key uncertainties in the M&A game

Behind the industry's high prosperity, competition is becoming white-hot, and the potential risks of this M&A cannot be ignored. Galaxy Microelectronics noted in its risk warnings that Hentek will face dual competitive pressure from international giants and domestic emerging companies. At the same time, if the global macro economy weakens, downstream demand growth slows, or the semiconductor industry experiences a deep, sustained downturn, it will directly affect Hentek's performance.

A more core uncertainty is that the final valuation and consideration for this transaction have not been finalized. As of the signing date of the plan, Hentek's audit and evaluation work is still in progress, and the transaction price has not been disclosed. The share issuance price for this transaction is set at 28.48 yuan per share, with a lock-up period of 36 months for the shares received by the counterparties. The proceeds from the supporting fundraising 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 shows that Hentek's operating revenue in 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, respectively, showing stable profit growth. As of the end of 2025, Hentek's parent company shareholders' equity was only 416 million yuan, indicating a significant light-asset characteristic.

Jiang Han pointed out that the valuation core of light-asset semiconductor design companies lies in intangible assets such as IP cores and R&D teams. Traditional PE/PB models often fail due to high earnings volatility and high upfront investment. A reasonable valuation should be based on a multi-stage discounted cash flow (DCF) model, supplemented by relative valuation for cross-validation, and incorporate qualitative factors such as technology iteration risk and downstream application cyclicality into quantitative consideration. Whether there is a premium bubble cannot be simply judged by net assets or short-term profits; it should comprehensively evaluate the target's technical scarcity in the sub-field, commercialization progress, and transaction payment structure.

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

On the funding front, the company's cash and cash equivalents also declined. As of the end of 2025, Galaxy Microelectronics' cash and cash equivalents were only 137 million yuan, down 44.65% YoY; operating cash flow weakened year by year, affected by longer customer payment cycles and increased inventory. Last year, net operating cash inflow was 43.7501 million yuan, down 34.73% YoY.

A source from a private equity firm believes that the key is not the transaction itself but the consolidation timeline and synergy realization. Hentek has stable revenue and profits; post-closing consolidation can directly boost the listed company's performance. However, both companies are relatively small in size, and whether they can achieve a '1+1>2' synergy remains uncertain. The biggest risk is that a high premium acquisition creates large goodwill; if subsequent performance falls short, goodwill impairment will erode the listed company's profits.

Additionally, the abnormal stock price movement before the suspension raised questions about insider information leakage. Before the suspension announcement, Galaxy Microelectronics shares suddenly surged on June 10-11, rising nearly 19% in two days with significantly higher volume, while the semiconductor industry index rose only 2.70%, deviating significantly from the industry. In response, the company stated that there was no insider information leakage or insider trading related to the transaction.

Regarding market concerns, Blue Whale News called Galaxy Microelectronics' board office on June 29 but received no response by press time.