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How to solve the sequelae of Changdian Technology's overseas mergers and acquisitions?|The Case of Yiou Solution

Release Time:2022-05-03 Topic:Huatian Technology is a major benefit Reading:18 Navigation:Stock Liao information > Technology > How to solve the sequelae of Changdian Technology's overseas mergers and acquisitions?|The Case of Yiou Solution phone-reading

Original title: Changdian TechnologyHow to solve the sequelae of overseas mergers and acquisitions?| Yioujie case source:

In 2015, Changdian Technology successfully won the fourth largest chip packaging and testing manufacturer in the world as the sixth largest chip manufacturer in the world. Xingke Jinpeng has half of the shares and has become the third largest chip packaging and testing manufacturer in the world.

After the joy, this merger brought a lot of troubles to Changdian Technology. For example, huge debts, purchase compensation pressure, profitability questioned and so on. Today, the process of Changjiang Electronics Technology's acquisition of Xingke Jinpeng has long been over, but Changjiang Electronics Technology is still solving the "trouble" caused by this overseas merger.

With the gradual implementation of 5G, the semiconductor industry will also usher in a rising period. In this context, how Changjiang Electronics Technology will seize new opportunities and completely solve existing problems is its top priority.

Accidental and inevitable behind mergers and acquisitions

Changdian Technology was formally established in 1998, and in 2003 Elderly Electric Technology was listed on the Shanghai Stock Exchange and began to be listed and traded. As a result, Changjiang Electronics Technology has become the first listed company in the domestic semiconductor packaging and testing industry. After more than ten years of hard work, the leading domestic chip packaging company is also Changdian Technology.

However, Changdian Technology, which has always advocated wolf-like culture, is naturally unwilling to settle for the status quo. Since 2014, Changdian Technology has begun to expand its overseas business.

In August 2014, the joint venture company signed by Jiangsu Changdian Technology and SMIC settled successfully. The joint venture company has 12-inch bumping and supporting wafer chip testing (CP Testing) capabilities. Therefore, the cooperation between Changdian Technology and SMIC not only amplifies the advantages of Changdian Technology in the field of packaging and testing technology, but also increases Let it have the opportunity to reach international customers, so as to expand overseas markets.

This cooperation should have been a good opportunity for Changjiang Electronics Technology to improve its overseas reputation, but Changdian Technology's technical strength at that time was not enough to meet the needs of overseas markets, especially Customers' demand for advanced packaging and testing technology. In addition, Changdian Technology's cost control has problems.

By analyzing Changdian Technology, Tongfu Microelectronics, Huatian Technology The 2014 annual reports of the three companies show that the operating cost of Changdian Technology remains high, especially the management cost of 800 million yuan, far exceeding the other two companies.

However, part of the reason for JCET's high management costs is the size of the company and the large number of employees. Therefore, it is difficult for Changdian Technology to reduce management expenses, and it can only reduce the management expense rate by expanding revenue.

Under such circumstances, mergers and acquisitions are the best way to solve the dilemma of Changdian Technology. Coinciding with the global economic slowdown, coupled with the start of the global integrated circuit industryThe shift to developing regions has caused international semiconductor giants to adjust their industrial layouts one after another, and it often happens that they shut down and transfer their subordinate packaging and testing manufacturers.

Just in time, during the period of industrial turmoil, Stats ChipPAC, the world's fourth largest packaging and testing manufacturer, was seeking sales due to unfavorable business operations, making Changdian Electronics Co., Ltd. Technology saw a turnaround.

Therefore, Changdian Technology started its merger and acquisition plan. It is conceivable that it is not easy for Changdian Technology, which is already "severely ill", to acquire a company whose size exceeds its own.

The ending of the classic acquisition has changed

The news of the sale of Xingke Jinpeng has long been A number of companies such as Electronic Technology and Huatian Technology began to contact Xingke Jinpeng. For the purpose of restoring the company's profitability and expanding overseas business, Changjiang Electronics Technology's "merger and acquisition" heart appears more urgent. It was mentioned in the 2014 annual report: "The company actively promoted overseas mergers and acquisitions, conducted in-depth discussions and demonstrations with Temasek, the controlling shareholder of Singapore STATS ChipPAC Ltd., and finally reached a major asset purchase plan."

After several rounds of evaluation, Xingke Jinpeng chose Changdian Technology, which has better company scale and overall strength, and Changdian Technology also spent a lot of thought on this acquisition.

From the revised draft reorganization disclosed by Changdian Technology, it is understood that Changdian Technology and the "Industry Fund" and Chip Semiconductor (Shanghai) Co., Ltd. under SMIC The company jointly launched a general tender offer for Xingke Jinpeng, a Singapore-listed company, by adopting a three-level structure of "Changdian New Branch-Changdian New Peng-Singapore JCET Company".

As a result, in the total transaction price of 780 million US dollars, Changdian Technology only spent 260 million US dollars to obtain 50% of the equity of Xingke Jinpeng . With the support of its partner SMIC and the "industry fund" representing the will of the country, Changjiang Electronics Technology finally brought Xingke Jinpeng under its command. After this acquisition, Changjiang Electronics Technology has become the third largest packaging and testing factory in the world, and its operating conditions have gradually improved.

The good times didn't last long, and the sequelae of this classic M&A case became apparent. The most obvious symptom is that Changdian Technology has a huge debt on its back. The house leak happened to rain overnight, the global semiconductor industry entered a period of market weakness, the domestic economy slowed down, and Changdian Technology's performance was poor due to the impact of the environment.

Since 2016, after deducting non-recurring gains and losses, Changdian Technology's net profit has continued to be negative, and the loss in 2018 even reached 926 million yuan. In addition, the gross profit margin of Changdian Technology has been declining year by year. For example, in the third quarter of 2016-2019, Changdian Technology's gross profit margins were 11.82%, 11.71%, 11.43%, and 10.43%, which were far below the level of peers.

This acquisition has indeed brought great pressure to Changdian Technology, and some people even worry that Changdian Technology will be stagnant because of this. Is this really the case?

Get rid of the predicament and turn around

If Changdian Technology's overseas mergers and acquisitions are for the purpose of Entering the international market, then its purpose has been achieved. Not only that, after the acquisition, the market value of Changdian Technology increased from 11.7 billion yuan at that time to 44.608 billion yuan.

In fact, most companies in the semiconductor industry will go through the process of mergers and acquisitions, digestion, absorption and re-innovation after mergers and acquisitions. For example, after Intel spent $16.7 billion to acquire Altera in 2015, in order to make up for Altera's lack of chip manufacturing, it actively promoted Altera to work closely with TSMC.

The reason why Changdian Technology's net profit has been negative year after year is "digesting" Xingke Jinpeng: stripping off the redundant part of Xingke Jinpeng, Accelerate the release of Xingke Jinpeng's production capacity.

At the same time, Changdian Technology accelerated the digestion process in order to improve profitability. It is understood that in 2019, Changdian Technology invested a total of 1.69 billion yuan to expand production capacity for key customers, of which Changdian Technology Co., Ltd.The relocation and expansion and the expansion of Jiangyin Chengdong Plant cost 920 million yuan.

In addition, the management of Changjiang Electronics Technology Co., Ltd. has undergone major adjustments. Zhou Zixue, chairman of SMIC, has been appointed as the company's new chairman, and Zheng Li, former senior vice president of NXP, has been appointed. Company CEO. This major change of management has improved the management efficiency of Changjiang Electronics Technology and laid a good foundation for its "turnaround from losses to profits".

After the readjustment of Changdian Technology, external favorable factors are also increasing. The impact of the "US ban" has caused Huawei to begin to readjust its supply chain. In this context, Changdian Technology has become Huawei's first choice for "domestic substitution" by virtue of its own technological advantages. According to estimates by relevant persons, the market space of HiSilicon's packaging and testing orders is expected to reach US$4 billion in 2023, and Changdian Technology's share of HiSilicon's packaging and testing orders is expected to increase to 25%-30%.

As 5G commercialization promotes the semiconductor industry to enter a period of rising industry, Changdian Technology, which is gradually "recovering", can take this opportunity to adjust its status and sweep away overseas mergers and acquisitions brought haze. Today, in terms of advanced packaging, Changjiang Electronics Technology has the most exquisite technology, and its production capacity is stronger than its peers. The demand for RF packaging SIP driven by 5G commercial use will also greatly increase.

At the same time, the outbreak of the Wuhan epidemic did not affect the resumption of work of Changjiang Electronics Technology. Driven by many favorable factors, the "sequelae" of Changdian Technology's overseas mergers and acquisitions will also be just around the corner.

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