Behind the 20CM Limit-Up Resumption: Galaxy Microelectronics Plans Acquisition to Break into High-End Power Semiconductors

Galaxy Microelectronics (688689.SH), after a suspension of over half a month, recently disclosed a restructuring plan and resumed trading the following day. The company plans to acquire 100% of Hengtaike Semiconductor through a share issuance and raise matching funds.

On the resumption day, stock price hit the 20CM limit-up, closing at 55.88 yuan per share, total market cap rising to about 7.2 billion yuan. Turnover rate was only 1.21%, with limit-up orders totaling 291 million shares, 185 times the day's trading volume, representing over 1.5 billion yuan in order value.

Amid the booming power semiconductor cycle, the market gave a positive outlook on Galaxy Microelectronics' move into the mid-high voltage power semiconductor track through acquisition. However, the deal still faces multiple controversies, including insider trading concerns over abnormal price surges before suspension, undetermined target valuation, and potential large goodwill pressure in the future.

Product Line and Customer Management: Primary Integration Challenge

Jiang Han, senior researcher at Pangu Think Tank, said the biggest integration challenge lies in fine management of product lines and customers. Hengtaike has over 700 product models, bringing the total to over 1,000 post-merger, significantly increasing complexity in customer management and capacity allocation.

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

Closing Gaps Through Acquisition: Technology Leap Still Faces Real Barriers

Unlike some cross-border or less synergistic acquisitions, Galaxy Microelectronics' acquisition of Hengtaike is an industrial merger to fill gaps and enhance synergy. If completed, the company can fill its mid-high voltage power semiconductor technology gap, fill high-end product voids, and improve overall product matrix.

Since its listing on the STAR Market in 2021, Galaxy Microelectronics' core business has been small-signal devices and low-voltage power devices. However, its position in high-end areas such as high-voltage MOSFETs, IGBTs, and SiC has been relatively slow, and disclosed technology breakthroughs have not yet translated into actual performance, limiting its penetration into high-end markets like automotive electronics.

Amid intensifying industry competition, Hengtaike is seen as a key lever for Galaxy Microelectronics to break through technology bottlenecks. According to the restructuring plan, Hengtaike is a national-level specialized and new 'Little Giant' enterprise, focusing on R&D and sales of power semiconductor products for applications in power supplies, lithium battery protection, brushless motors, new energy, and E-car (OBC, electric control).

Hengtaike possesses medium-voltage SGT MOSFET and high-voltage Super Junction technology. Its 150V-200V medium-high voltage SGT MOSFET has reached domestic top level, and can Pin-to-Pin replace Infineon's medium-voltage series products.

This transaction reflects a 'Fabless design + IDM manufacturing' chain integration: Galaxy Microelectronics has mature chip manufacturing capacity but lacks high-end design capability; Hengtaike has top design technology but lacks its own production line, long constrained by foundry capacity and cost volatility. The two have complementary business aspects, but synergy realization depends on subsequent integration.

Valuation Fog and Capital Pressure: Undetermined Pricing Creates Uncertainty

Zhang Jiaming, general manager of investment department at Guangzhou Ruizhi Venture Capital, noted that for small and medium companies, M&A offers the biggest advantage of shortening development time and achieving faster industry chain synergy. But integration risk is undoubtedly the biggest challenge, involving differences in organizational structure, corporate culture, team integration, and R&D paths. Only through fine management to reduce internal friction can synergy be achieved to drive strategy.

Potential risks are also a concern. Galaxy Microelectronics warned in the plan that Hengtaike will face dual competitive pressure from international giants and domestic newcomers. If global macroeconomy weakens or downstream demand growth slows, or even a deep and sustained semiconductor downturn occurs, Hengtaike's operating performance could be affected.

A more core uncertainty is that the final valuation and consideration have not been disclosed. As of the plan signing date, audit and valuation of Hengtaike were still in progress, and transaction price was not disclosed. The share issuance price is 28.48 yuan per share, with a 36-month lock-up period for the counterparty. Matching funds will be used for transaction fees, intermediary fees, target project construction, and supplementing working capital and repaying debts.

Unaudited data shows Hengtaike's revenue was 206 million yuan in 2024 and 193 million yuan in 2025; net profit attributable to parent was 32.23 million yuan and 35.72 million yuan respectively, with stable profit growth. As of end of 2025, Hengtaike's parent company shareholder equity was 416 million yuan, highlighting a light asset nature.

Jiang Han believes that the valuation of light-asset semiconductor design companies lies in intangible assets such as IP cores and R&D teams. Traditional PE/PB models may be invalid when initial investment is high and earnings fluctuate. Reasonable valuation should be based on multi-stage discounted cash flow (DCF) model, cross-validated with relative valuation methods, while qualitatively considering technology iteration risk and downstream application cyclicality to judge whether the transaction structure contains premium bubbles.

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 71.87 million yuan, up 12.21%. In 2025, revenue was 1.05 billion yuan, up 15.46%; net profit was 79.90 million yuan, with growth slowing to 11.17%.

In terms of capital, Galaxy Microelectronics' monetary funds at end of 2025 were 137 million yuan, down 44.65% year-on-year. Operating cash flow weakened: net operating cash inflow was 43.75 million yuan, down 34.73% year-on-year, related to longer customer payment cycles and increased inventory.

A private equity insider said whether the acquisition can realize cyclical dividends depends on consolidation timing and synergy delivery. Hengtaike has stable revenue and profit, and could boost the listed company's earnings post-consolidation, but both sides are relatively small, and whether '1+1>2' synergy can be achieved is uncertain. The biggest risk is that a high premium acquisition creates large goodwill; if subsequent performance falls short, goodwill impairment will eat into the listed company's profits.

Abnormal Stock Price Movement Before Suspension Raises Concerns; Transaction Parties Respond Limitedly

In addition, abnormal stock price movement before the suspension has raised insider information leakage concerns. On June 10-11, two trading days before the suspension announcement, Galaxy Microelectronics' stock surged nearly 19% cumulative with heavy volume, while the semiconductor industry index only rose 2.70%, significantly deviating from the industry. The company issued a statement stating that relevant parties in the transaction have no insider information leakage or insider trading violations.

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