The

mergers and acquisitions of the semiconductor sector have added another member. Fingerprint recognition chip manufacturer Goodix Technology Co., Ltd. (603160.HK) SH) recently announced that it intends to purchase the control of Yunyinggu Technology Co., Ltd. (hereinafter referred to as "Yunyinggu").

Trading in Goodix's shares will be suspended from November 25 and is expected to last no more than 10 trading days. As of the latest closing date, Goodix's share price was 81.8 yuan, a cumulative increase of 18.73% during the year, with a total market value of 37.5 billion yuan.

Founded in 2012, Yunyinggu is a display chip designer that has attempted an independent IPO in 2023 with CICC as the sponsor. There are many well-known industrial funds and listed companies in the industrial chain in the shareholder camp of Yunying Valley, including Xiaomi Yangtze River Fund, Huawei, BOE (000725. SZ), Qualcomm (China) Holdings, Qingyue Technology (688496. SH), SMIC (688981. SH) equity investment platform and so on.

Yunyinggu has raised 12 rounds of financing since its establishment

According to the announcement, Goodix Technology intends to purchase the control of Yunyinggu by issuing shares and paying cash, and the counterparties are Gu Jing, Shenzhen Yishi No. 1 Enterprise Management Center Limited Partnership (hereinafter referred to as "Yishi No. 1"), Shenzhen Yisheng No. 1 Enterprise Management Center Limited Partnership (hereinafter referred to as "Yisheng No. 1") and Shenzhen Yisheng No. 2 Enterprise Management Center Limited Partnership (hereinafter referred to as "Yisheng No. 2").

Tianyan check shows that Gu Jing is the actual controller, chairman, and general manager of Yunying Valley; Yishi No. 1, Yisheng No. 1 and Yisheng No. 2 respectively hold 9.65%, 6.36% and 3.37% of the shares of Yunyinggu, with a total shareholding ratio of 19.38%.

In January 2023, CICC released the Yunyinggu listing guidance filing report, that is, the company's listing plan was launched. According to the report, the controlling shareholder of Yunyinggu is Yishi No. 1, and the company has set up special voting rights, and Yishi No. 1 controls 44.77% of the voting rights.

However, as of now, the official websites of the Shanghai Stock Exchange and the Shenzhen Stock Exchange have not shown that Yunyinggu's IPO has been accepted, which also means that its independent IPO plan has not been followed. If this merger and acquisition is implemented, Yunyinggu will be listed on the curve, not only the actual controller Gu Jing and the controlling shareholder Yishi No. 1 will be cashed out, but a large number of venture capital will also be able to complete the exit.

Since its establishment, Yunyinggu has raised a total of 12 rounds of financing, and the company received millions of dollars in angel round financing in January 2013, led by Yichuang Investment, CITIC Capital, and Vertex Investment China Fund; In 2015, BOE led the A round of financing. Since 2018, the pace of financing in Yunying Valley has accelerated, and Xiaomi Group, Qualcomm Ventures, SMIC Juyuan, and Qingyue Technology have all invested in Yunying Valley that year. In May 2021, Huawei's Hubble Capital invested in Yunyinggu's D+ round of financing alone.

In terms of Goodix's financial position, as of the end of the third quarter of this year, the company's monetary funds were 3.337 billion yuan, the asset-liability ratio was 14.77%, short-term borrowings were 185 million yuan, and the non-current liabilities due within one year were 25.0227 million yuan, and there was no pressure on short-term debt repayment. According to the "2024 Hurun Global Unicorn List" released on April 9, 2024, Yunyinggu ranked 976th with an enterprise valuation of 8.5 billion yuan.

Founded in 2012, the company is a collection of AMOLED display driver chips, Micro OLED/Micro LED microdisplay chips, display technology IP authorized integrated circuit design and production enterprises, product applications for mobile phones, medium-sized tablets and laptops, AR/VR/MR/XR and other industries and consumer fields.

Headquartered in Shenzhen, Yunyinggu has R&D, sales and operation centers in Shanghai, Beijing, Kunshan and Hong Kong, with a total of more than 200 employees, 68% of whom are R&D personnel. CINNO Research data shows that in the field of mobile phone AMOLED display driver chips, Yunyinggu's overall AMOLED display driver chip sales in 2023 will rank fifth in the world and first among suppliers in Chinese mainland.

Yunyinggu announced on the company's WeChat public account on September 2 that it had completed a new round of capital increase, which was jointly invested by Vertex Investment and Chengdu Ceyuan. After the completion of this round of capital increase, Yunyinggu has a capital reserve of more than 1 billion yuan to cope with the rapid growth of performance and the industry cycle. Yunyinggu expects that in 2024, the company will ship 55 million to 60 million OLED driver chips for brand mobile phones.

Goodix plans to enter the field of display chips

Goodix is also a chip designer, and its main products include sensing products (fingerprint sensors, optical fiber sensors, etc.), touch products, audio products, etc., which are mainly used in smartphones, tablets, PCs, automobiles, medical, industrial and other terminal devices with screens, and the company's downstream customers include Huawei, Xiaomi, Samsung, vivo, etc.

According to the 2023 annual report, fingerprint recognition chips and touch chips are Goodix's main sources of revenue, accounting for about 79.8% of the total revenue, of which touch chips show a rapid growth trend. In terms of regions, Goodix's domestic and overseas revenue volumes are basically the same, and the gross profit margin in overseas regions is relatively high.

The company did not disclose the specific purpose of the merger and acquisition in this announcement, but industry insiders believe that Goodix intends to further expand the chip category through this acquisition, based on the analysis that the downstream products of the main products of the two parties can be used in consumer electronics, automotive electronics and other fields.

In the first three quarters of this year, with the recovery of global semiconductor demand, Goodix achieved operating income of 3.222 billion yuan, a year-on-year increase of 0.82%, net profit attributable to the parent company of 448 million yuan, a year-on-year increase of 3499.3%, and net profit attributable to the parent company of 399 million yuan after deducting non-profits. Public information also shows that the company's revenue in the third quarter of this year decreased by 17.71% year-on-year, and net profit and non-net profit decreased to varying degrees. Among them, touch chips accounted for 35% of the company's revenue in the third quarter, and fingerprint chips accounted for about 44%.

As for the reasons for the decline in revenue and profit in the third quarter, Goodix Technology said at the performance briefing that the quarter-on-quarter decline in sales revenue was mainly affected by fluctuations in market demand and the pace of customer stocking, which was within the normal fluctuation range. The sequential decline in profit was due to the decline in gross profit margin from 44% to 41%, due to the decline in the proportion of revenue from the company's high-gross margin product touch chips; Ultrasonic fingerprints have contributed revenue to the company since the third quarter, and ultrasonic fingerprints accounted for 9% of the revenue of fingerprint products in the third quarter.

After increasing its holdings in Goodix Technology for four consecutive quarters, Lu Xiangtong sold 12,753,200 shares in the third quarter, with a net sale of about 7.6 million shares during the year, and the number of shares held as of the end of September was 18,818,500 shares, making it the second largest shareholder, accounting for 4.11% of the total share capital. The National Social Security Fund 503 Portfolio, CSI 500 ETF, and Guolianan CSI All-Index Semiconductor ETF increased their holdings by 500,000 shares, 1,639,700 shares, and 422,700 shares, respectively.