CR Microelectronics Visual China Data map

Recently, Li Hong, president of power semiconductor manufacturer China Resources Micro (688396), said at the investor open day that after almost two and a half years of adjustment, the semiconductor industry has slowly recovered from the trough, especially the rapid development of artificial intelligence data centers, driving a new wave of demand for integrated circuit chips. CR Micro expects to further increase R&D investment this year, and at the same time, the company is also actively looking for M&A opportunities to further expand its scale.

"In 2025 and the upcoming 15th Five-Year Plan, we will focus on the improvement of our own core competitiveness, especially the improvement of technical capabilities." Li Hong said that the company is also "opening its eyes" to look for mergers and acquisitions opportunities to further expand the company's scale.

Li Hong said that in the past two years, the industry has been in a period of adjustment, but with the advantages of IDM (integration of design, manufacturing and packaging), characteristic process platform, and high customer stickiness, the company's utilization rate is at a high level in the industry, whether it is 6 inches or 8 inches, it is maintained at more than 90%, and the 12-inch ramp up has met expectations, and the company's operating cash flow has also increased.

Wu Guoyi, director and secretary of the board of directors of China Resources Micro, revealed that product prices will be relatively stable in the fourth quarter of 2024, and the company expects that 2025 will be a slow recovery process, during which prices will remain stable and the volume will increase to a certain extent.

How can the company maintain its competitiveness in terms of the release of more mature process capacity in recent years? Li Hong said that the company's "two rivers and three places" development plan was put forward five years ago, of which Chongqing and Shenzhen two 12-inch lines are also differentiated, of which Chongqing specializes in discrete devices, while Shenzhen focuses on integrated circuits, which can make the two 12-inch lines in operational efficiency, capacity utilization has more room for development.

"We are more focused, many process platforms of other companies are concentrated together, and we also have a foundation, whether it is our R&D capabilities, process capabilities, manufacturing capabilities or even our customer capabilities have long-term accumulation." Li Hong emphasized that the company's IDM model enables the company to develop and iterate new products faster than others.

For the growth opportunities in 2025, Li Hong said that the future growth opportunities are mainly concentrated in the field of AI, mainly including data centers, new energy vehicles, etc., among them, the number of chips in new energy vehicles is at least two or three times higher than that of traditional fuel vehicles, which is also the company's specialty, is the company's future growth point. In addition, the company in the field of third-generation semiconductors, whether it is silicon carbide or gallium nitride, is a new incremental area this year, plus the production capacity of the 12-inch two lines and the company's 6-inch and 8-inch lines are further optimized, to better promote the company's internal capacity structure to adjust in the direction of higher gross profit margin, which is an important growth point for the company.

Wu Guoyi revealed that because the company has laid out four major projects in the first two years, there is not much investment in fixed assets this year, mainly focusing on the upgrading and optimization of some processes and equipment updates, which are daily investments. In 2025, such investments are expected to remain at the same level as in previous years. The other is that there will be some relatively large capital expenditures in equity mergers and acquisitions, but there is still some uncertainty in this part. He said that the company's current debt ratio is relatively low, and there are sufficient conditions to do some relatively large industrial integration or mergers and acquisitions.

Regarding the selection of M&A targets, Li Hong said that first of all, the M&A targets should be of strategic significance to CR Micro, and it is necessary to match CR Micro's strategic planning to further expand and strengthen in the existing fields and areas of expertise; Secondly, it is hoped to merge and acquire some large companies, so that the scale of the company can be further expanded, and the current scale of 10 billion yuan of China Resources Micro is not enough.

In December last year, CR Micro disclosed on the record sheet of investor relations activities that the company focused on enterprises that are in line with the company's strategic development direction, mainly focusing on the three major fields of power semiconductors, sensors and intelligent control, and actively discussed future win-win cooperation plans with leading enterprises and teams with unique advantages in the subdivided industry.

Some investors asked how to view the competition between China Resources Micro and China Resources Group's other Changdian Technology (600584), Li Hong said that Changdian Technology is a leading packaging and testing company in China, and China Resources Micro's packaging and testing business is an important part of the company's IDM model, which can provide high-reliability packaging and testing services internally, and also provide packaging and testing OEM services externally. Achieve the effect that one plus one is greater than two.

At the close of trading on January 13, China Resources Micro closed at 44.42 yuan, up 0.45%.