Resumed Trading '20CM' Limit-Up: Energy M&A Watch - Galaxy Microelectronics Acquires Hengtek to Enter High-End Power Semiconductor Arena
Galaxy Microelectronics (688689.SH), after a suspension of over two weeks, disclosed a restructuring plan on the resumption day and initiated trading. The company plans to acquire 100% of Hengtek Semiconductor from three shareholders – Shanghai Zhineng Hengxin Industrial Electronics Co., Ltd., Gongqingcheng Mingnuo Investment Partnership (Limited Partnership), and Tianmu Yulin (Shanghai) Technology Co., Ltd. – via share issuance, and simultaneously raise matching 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. Turnover rate was only 1.21%, with limit-up orders reaching 291 million shares, 185 times the day's trading volume, representing over 1.5 billion yuan in pending orders.
In the high-cycle power semiconductor industry, the market gave a positive outlook to the veteran discrete device maker's move to enter the medium- and high-voltage power semiconductor track via M&A. However, the deal faces multiple controversies, including insider trading allegations due to abnormal stock price surge before suspension, the yet-to-be-determined target valuation, and potential large goodwill pressure in the future.
Jiang Han, senior researcher at Pangoal Institution, said in an interview that the biggest integration challenge lies in fine management of product lines and customers. Post-merger, Hengtek will bring over a thousand product types, sharply increasing customer management and capacity allocation complexity. Second, core technology is highly tied to the R&D team; without reasonable equity incentives and non-compete clauses, there may be risk of technology loss and goodwill impairment.
M&A to 'Fill Gaps': Technology Leap Still Faces Real Barriers
Galaxy Microelectronics' acquisition of Hengtek is an industrial M&A focused on complementing weaknesses and synergy. Upon completion, the company can fill its medium- and high-voltage power semiconductor technology gaps, bridge high-end product voids, and enhance its overall product matrix.
Galaxy Microelectronics, a semiconductor discrete device company listed on the STAR Market in 2021, has long relied on small-signal devices and low-voltage power devices as its core performance base, but has been relatively slow in high-end areas such as high-voltage MOSFETs, IGBTs, and SiC. Industry leaders have already built full-chain technology loops from materials to process and manufacturing, while domestic competition accelerates, with high-end capacity continuously released, narrowing the catch-up window.
According to the restructuring plan, Hengtek is a national-level specialized 'Little Giant' enterprise mainly engaged in research, development, and sales of power semiconductor products, applied in power supplies, lithium battery protection, brushless motors, new energy, and E-car (OBC, electronic control). Hengtek holds medium-voltage SGT MOSFET technology and high-voltage Super Junction technology, with its 150V-200V medium- and high-voltage SGT MOSFET reaching domestic top-tier level, capable of pin-to-pin alternative to Infineon's medium-voltage series.
The transaction is described as a 'Fabless design + IDM manufacturing' chain integration: Galaxy has mature chip manufacturing capacity but lacks high-end design capability; Hengtek has top-tier design technology but no own fab, long constrained by foundry capacity and cost volatility. Business complementarity exists. Whether synergy materializes depends on post-merger integration.
On M&A value, investment insiders said small-company acquisitions can shorten development cycles, helping firms quickly form industry chain synergy and boost overall strength. At the same time, integration risk remains the biggest challenge, involving differences in organizational structure, corporate culture, team integration, and R&D pathways. Fine management is needed to reduce internal friction and drive strategy execution.
Valuation Fog and Funding Pressure: M&A Game Continues
Galaxy Microelectronics warned in the plan that Hengtek faces competitive pressure from both international giants and domestic new entrants. If the global macroeconomy weakens, downstream demand growth slows, or the semiconductor industry undergoes deep or sustained downturns, Hengtek's performance may be affected.
A more core uncertainty is that the final valuation and consideration for the deal have not been determined. Audit and valuation of Hengtek are still ongoing as of the plan signing date; transaction price is not yet disclosed. The share issue price for the deal is set at 28.48 yuan per share, with a 36-month lock-up period for the sellers' shares. Matching funds will be used for transaction taxes and fees, intermediary costs, target project construction, and supplementing the listed company's working capital and debt repayment.
Unaudited data shows Hengtek's revenue in 2024 and 2025 was 206 million yuan and 193 million yuan respectively, with net profit attributable to parent of 32.23 million yuan and 35.72 million yuan, showing stable profit growth. As of end-2025, Hengtek's parent company equity was only 416 million yuan, highlighting its asset-light nature.
Discussing valuation of asset-light semiconductor design firms, researchers noted that traditional PE/PB models may fail due to large profit fluctuations and high upfront investment. A more feasible approach is to base on multi-stage DCF and cross-validate with relative valuation, while quantifying technology iteration risk, downstream application cyclicality, and assessing technology scarcity, commercialization progress, and payment structure.
From the listed company's fundamentals, Galaxy Microelectronics saw consecutive year-on-year declines in net profit in 2022-2023. In 2024, revenue was 909 million yuan, up 30.75%, net profit 71.87 million yuan, up only 12.21%. In 2025, full-year revenue was 1.05 billion yuan, up 15.46%, net profit 79.9 million yuan, growth slowing to 11.17%. On cash, as of end-2025, cash and equivalents were 137 million yuan, down 44.65% year-on-year, operating cash flow weakened year by year, with net operating cash inflow of 43.75 million yuan in 2025, down 34.73%.
Investment insiders believe whether the M&A delivers cyclical gains depends not on deal closure but on consolidation timing and synergy realization. Given the small size of both parties, whether '1+1>2' synergy can be achieved remains uncertain. The biggest risk is high premium acquisition creating large goodwill; if subsequent performance disappoints, goodwill impairment will erode listed company profits.
Additionally, abnormal stock price movement before the suspension has raised market questions about inside information leakage. On June 10-11, before the suspension announcement, Galaxy Microelectronics' stock surged nearly 19% in two trading days with heavy volume, while the semiconductor sector index rose only 2.70%, deviating sharply from the sector. The company issued a statement that no illegal insider trading or information leakage occurred related to the transaction.
Regarding market concerns, media called Galaxy Microelectronics' board office on June 29 but received no reply by press time.
