Recently, Xidi Microelectronics Group Co., Ltd. (hereinafter referred to as "Xidi Microelectronics", stock code is 688173. SH), a wholly owned subsidiary of Halo Microelectronics International Corporation ("HMI"), has completed the acquisition of a 30.91% stake in Zinitix Co., Ltd. ("Zinitix").

According to the announcement dated September 2, 2024, all closing conditions precedent to the transaction have been met and closing will be completed on August 29, 2024. HMI paid the transaction price of KRW 21,005,377,046 (equivalent to approximately RMB 109 million) and has been registered as a shareholder of Zinitix, holding a 30.93% stake in Zinitix. In addition, Zinitix has appointed individuals appointed by HMI as directors and officers of Zinitix, and HMI has taken over the management of Zinitix.

After the completion of this transaction, Zinitix will become a holding subsidiary of Xidiwei and will be included in the consolidated financial statements. This will help the company to broaden its technology and product layout, accelerate the expansion of product categories and downstream fields, and enhance the company's sustainable operation ability and market competitiveness.

It is worth noting that Xidiwei previously stated that the funds for this transaction come from the company's own funds and/or self-raised funds, which will not have an impact on the normal development of the company's existing main business, nor will it have a significant adverse impact on the company's financial condition, so there is no harm to the interests of the company and all shareholders, especially small and medium-sized shareholders.

At the same time, Xidiwei is also aware of the possible risks in the post-acquisition integration process, including the risk of goodwill impairment and the uncertainty of the integration of the two companies in terms of corporate culture and management system. The company said that it will actively take measures to integrate the management team and management system to reduce the acquisition risk.

In this transaction, CICC leveraged its expertise in the semiconductor field and extensive experience in cross-border M&A to provide comprehensive project support to C&D. Through its in-depth involvement in all phases of the project, CICC helped C&D identify and leverage its competitive advantages to ensure the transaction went smoothly.

Cidimicro's strategic acquisition of Zinitix: deepening technology integration and expanding the semiconductor market territory

Zinitix Co., Ltd. is a Korea integrated circuit design company founded in 2000 focusing on the design of system-on-chip (SoC) semiconductors. The company's product line covers touch controller chips, autofocus chips, haptic driver chips, DC/DC power management chips, touchpad modules and audio amplifiers. These products are widely used in mobile/wearable devices such as smartphones, smart watches, and tablets, as well as laptops, home appliances, and automotive products.

Through years of deep cultivation and innovation, Zinitix has formed a diversified product category and application field. The company's core technology system includes digital design technology, analog design technology, high-power circuit design technology, closed-loop control technology and MCU application software technology, etc., with strong industry competitiveness. Zinitix's main products have successfully entered the supply chain system of Samsung Electronics, an internationally renowned terminal brand, and become one of its suppliers of consumer electronics such as smartphones. In addition, Zinitix has established business relationships with more than 50 customers around the world and has formed 159 intellectual property rights worldwide.

In terms of finance, according to the 2022-2023 audit report, Zinitix's revenue was 27,611,138,913 won (about 145 million yuan) and 33,068,422,790 won (about 174 million yuan), and the net profit was a loss of 9,064,827,403 won (about 47.5903 million yuan) and a loss of 5, respectively. 877,620,907 won (about 30.8575 million yuan).

It can be seen that this acquisition will help Xidiwei quickly absorb Zinitix's mature patented technology, R&D resources and customer resources, and then expand its product categories, especially in the fields of mobile phones and wearable devices.

At the same time, Zinitix's camera autofocus chip product line has strong synergy with the existing voice coil motor driver chip product line, which will help the company further increase the market share and technical strength of this product line. This acquisition is an important measure for Xidiwei to further promote the company's strategic layout and enhance market competitiveness.

Xidiwei: Financial challenges and market opportunities coexist, and the domestic chip industry is a double test

Founded in 2012, the company is a supplier of analog integrated circuit products focusing on power management and signal chain chips. With an international R&D and management team, we have developed high-efficiency, high-precision, and high-reliability chip products, including DC/DC chips, super fast charging chips, etc., which have been approved by Qualcomm, MediaTek and other main chip platform manufacturers, and are widely used in consumer electronic devices of many well-known brands.

In the field of automotive electronics, the automotive-grade power management chip products of C&D Micro have reached the AEC-Q100 standard, and have entered the global automotive-grade platform reference design of Qualcomm, which has been applied to multiple brands of cars. The company's R&D team accounts for about 60%, has a number of invention patents, and has built an innovative technology system.

According to the 2024 semi-annual report, the main business income of Xidiwei was 230 million yuan, a year-on-year increase of 84.48%; net profit attributable to the parent company was -118 million yuan, a year-on-year decrease of 393.08%; The net profit after deduction was -126 million yuan, a year-on-year decrease of 47.26%.

The company's single-quarter main revenue in the second quarter of 2024 was RMB107 million, an increase of 26.77% year-on-year; The net profit attributable to the parent company in a single quarter was -68.6479 million yuan, a year-on-year decrease of 405.99%; The non-net profit deducted in a single quarter was -71.4053 million yuan, a year-on-year decrease of 280.16%. The debt ratio was 10.46% and the gross margin was 34.74%.

In addition, in a recent institutional survey, Xidi Micro shared an optimistic view on the prospects of the analog chip industry and expressed expectations for the positive trend of the consumer electronics industry in the second half of the year. The company also detailed its latest progress in the field of visual perception business, server energy-saving chips and super fast charging chips.

With the continuous maturity of technology, domestic analog chips are expected to gradually replace foreign brands in the consumer electronics market, although the substitution process in high-end applications such as automobiles and servers may be relatively slow. In addition, the company expects the visual perception business to achieve significant revenue growth in the second half of the year, and has widely applied its super fast charging chip technology in well-known mobile phone brands at home and abroad, and is currently working with a number of leading mobile phone manufacturers and wearable device manufacturers to further expand its market influence.