Introduction
China’s semiconductor industry is undergoing a wave of mergers and acquisitions (M&A), with a significant focus on analog chips and semiconductor materials. According to a report by Yicai Global, 31 M&A deals have been disclosed this year, marking a notable trend in the sector. Over half of these deals surfaced after September 20, highlighting the rapid pace of consolidation in recent months.
This article explores the details of these M&A activities, their significance, and what they mean for China’s semiconductor landscape.
Overview of Key Developments
- Boom in M&A Activity: A total of 31 semiconductor M&A deals were disclosed in 2024, with 14 centered on analog chips and semiconductor materials.
- Analog Chip Sector in Focus: Seven major acquiring companies specialize in power management, signal chains, and power ICs.
- Semiconductor Materials Growth: Seven deals involved companies producing raw materials or silicon wafers, critical to semiconductor manufacturing.
- Major Transactions in Packaging: JCET, a leading Chinese semiconductor packaging and testing firm, completed two significant deals, including its own acquisition by China Resources Group.
- Digital Circuit Sector Lags: Only two deals were reported in digital circuits, emphasizing the focus on analog and materials sectors.
- Why Analog Chips and Materials Are Driving M&A
China’s semiconductor industry is strategically focusing on analog chips and materials, which are foundational to electronics manufacturing. Unlike digital circuits, analog chips are essential for power management and signal processing in devices like smartphones, electric vehicles, and industrial equipment.
Analog chips are difficult to replace or outsource, making them a high-value segment for China to secure domestic supply chains. This focus aligns with China’s broader strategy to reduce reliance on foreign semiconductor technologies amid global trade tensions.
Key Analog Chip M&A Deals
BPS Acquires Convenient Power
On October 22, Beijing Power Semiconductor (BPS) announced its acquisition of a controlling stake in Convenient Power. Both companies specialize in power management chips, with applications in mobile devices and automotive electronics. This deal enhances BPS’s product portfolio and strengthens its supply chain and customer base.
Other Key Players
Major players like Convert, Halo Microelectronics, and Novosense have been active in M&A, targeting companies specializing in signal chains and power ICs. These acquisitions are expected to improve production efficiency and market competitiveness.
Semiconductor Materials Sector Gains Momentum
Semiconductor materials have emerged as a critical area of investment. Seven M&A deals in this sector include:
- Silicon Wafer Manufacturers: Companies like Li-on, TCL Zhonghuan, and Grinm Semiconductor Materials acquired upstream silicon wafer producers to secure a stable supply of raw materials.
- Equipment Material Providers: Grandit and AESM, specializing in raw materials for semiconductor manufacturing equipment, initiated two notable deals.
These acquisitions underline the importance of securing raw materials as demand for semiconductors continues to grow globally.
JCET: A Leader in Packaging and Testing
March Acquisition
In March 2024, JCET acquired an 80% stake in SanDisk Semiconductor (Shanghai) for RMB 4.5 billion. This deal strengthened JCET’s position in the global semiconductor packaging and testing market.
Ownership Change
Shortly afterward, China Resources Group (CRC) acquired control of JCET for RMB 11.7 billion. CRC’s takeover reflects a broader trend of state-owned enterprises investing in the semiconductor sector to bolster China’s technological independence.
Digital Circuit Sector: A Slower Pace
Unlike analog chips and materials, the digital circuit sector saw only two deals in 2024. GigaDevice acquired a 70% stake in Xysemi for RMB 580 million, while Intellifusion made a smaller acquisition. This subdued activity suggests that digital circuits may not be a current priority for consolidation in China’s semiconductor strategy.
Broader Implications for China’s Semiconductor Industry
1. Strategic Independence
China is aiming for greater self-reliance in semiconductors. By focusing on analog chips and materials, the country ensures it can produce essential components domestically.
2. Meeting Global Demand
The global semiconductor market is projected to grow significantly in the coming years, driven by technologies like 5G, AI, and electric vehicles. These M&A deals position Chinese companies to capitalize on this growth.
3. Synergies and Efficiency
Many of the acquisitions are highly synergistic, enabling companies to integrate supply chains, expand product portfolios, and reduce costs.
4. Support from State-Owned Enterprises
State-owned enterprises, such as CRC, are playing a pivotal role in funding and supporting semiconductor companies to achieve national goals.
5. Shift in Investment Focus
The emphasis on analog chips and materials reflects a shift away from more crowded and competitive digital circuit markets.
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Conclusion
China’s semiconductor industry is witnessing a transformative year, marked by strategic M&A activity. The focus on analog chips and semiconductor materials underscores the country’s efforts to build a robust and self-reliant semiconductor ecosystem.
These acquisitions are more than just business moves—they represent a strategic pivot to address global demand, reduce reliance on foreign technologies, and strengthen China’s position in the global semiconductor market. As the industry evolves, the implications of these deals will likely shape the future of electronics and technology.
