21st Century Business Herald reporter Sun Yan reported from Shanghai

After nearly half a month of planning, on the evening of March 7, the leading domestic large silicon wafer Shanghai silicon industry (688126. SH) issued a plan to issue shares and pay cash to purchase assets and raise matching funds and related party transactions.

According to the plan, Shanghai Silicon Industry intends to acquire 46.7354% of the shares of its three subsidiaries, Shanghai Xinsheng Jingtou Semiconductor Technology Co., Ltd. (hereinafter referred to as "Xinsheng Jingtou"), 49.1228% of the shares of Shanghai Xinsheng Jingrui Semiconductor Technology Co., Ltd. (hereinafter referred to as "Xinsheng Jingke"), and 48.7805% of the shares of Shanghai Xinsheng Jingrui Semiconductor Technology Co., Ltd. (hereinafter referred to as "Xinsheng Jingrui") through the issuance of shares and cash payment.

The transaction adopts the model of "equity acquisition + supporting financing": in addition to acquiring a minority stake in the three subsidiaries by issuing shares and paying cash to achieve 100% control, Shanghai Silicon Industry will issue shares to no more than 35 specific investors to raise matching funds for project construction, payment of transaction consideration, replenishment of working capital, etc.

"As of the signing date of this plan, the appraisal of the target company has not been completed, and the appraisal value and transaction price of the underlying assets have not yet been determined." Shanghai silicon industry said.

According to the relevant regulations, after applying to the Shanghai Stock Exchange, the trading of Shanghai silicon industry stocks will be suspended from the opening of the market on February 24, 2025, and will resume trading from the opening of the market on March 10, 2025.

Wholly-owned holding "Xinsheng Series".

Shanghai Silicon Industry focuses on the R&D and production of semiconductor silicon wafers, and is one of the few enterprises in China to achieve mass production of 300mm large silicon wafers.

According to the plan, the target of the merger and acquisition of Shanghai Silicon Industry is the core implementation body of the second phase of its 300mm semiconductor silicon wafer technology research and development and industrialization project for integrated circuit manufacturing, of which Xinsheng Jingke is the shareholding platform, Xinsheng Jinke is mainly engaged in 300mm semiconductor silicon wafer cutting, grinding and epitaxy related business, and Xinsheng Jingrui is mainly engaged in 300mm semiconductor silicon wafer pulling related business.

Although the 2024 annual performance report shows that the Shanghai silicon industry is expected to have a net loss of 971 million yuan in 2024, and its performance will turn from profit to loss. However, at the beginning of 2025, Shanghai Silicon Industry still decided to wholly control the Xinsheng series to achieve full control of the core assets of the second phase of 300mm large silicon wafers.

Behind this, on the one hand, the iteration of domestic semiconductor technology and new demand are rising rapidly, such as the increase in the number of stacked layers of 3DNAND memory chips, the progress of the logic chip manufacturing process to 2nm, and the increasingly stringent requirements for defect control and surface nanometer accuracy of silicon wafers.

On the other hand, in the current complex international competition environment, with the long-term process of transferring production capacity to China, the domestic market will become one of the main battlefields for global semiconductor wafer companies.

In addition, the localization rate of key areas of the semiconductor materials industry still needs to be broken through, and epitaxial mergers and acquisitions are conducive to building platform enterprises to achieve leapfrog development. Silicon wafers account for a relatively high market share in semiconductor materials (33% in 2022), and industry leaders can expand under the same category to supplement the needs of existing customers in other segments, such as expanding to 300mm wafers, complementing the product lines of lightly doped and heavily doped silicon wafers, etc.

Seize the window period of downstream demand expansion

The semiconductor industry is a distinctly cyclical industry. Although the current semiconductor material market price is under short-term pressure, the demand for high-performance chips in emerging fields such as artificial intelligence, automotive electronics, and data centers continues to grow.

In an investor relations event at the end of August 2024, the Shanghai silicon industry expects that the semiconductor wafer industry will bottom out in 2024 after experiencing a sharp market decline in 2023. However, as the upstream link of the industrial chain, it will take some time for the recovery of the industry to be transmitted to the silicon wafer end, and the recovery of the silicon wafer market will lag behind the downstream links of the industrial chain such as the terminal market and chip manufacturing.

Although the semiconductor industry has entered the first year of another upward cycle, from the perspective of market competition, nearly 90% of the market share of the global 300mm silicon wafer market is monopolized by five companies in Japan, South Korea, Germany and Taiwan, such as Shin-Etsu Chemical and Shenggao, especially in the field of high-end epitaxial wafers required for sub-14nm processes, with a localization rate of less than 10%. In addition, China's dependence on the import of 300mm semiconductor silicon wafers is high, and there is a large gap in the domestic supply. At present, SMIC, Huahong Hongli and other leading wafer factories are accelerating the expansion of production, and the demand for 300mm semiconductor silicon wafers continues to grow.

In this situation, domestic semiconductor wafer listed companies such as Shanghai Silicon Industry, Lion Micro, TCL Zhonghuan, etc. are actively promoting capacity expansion plans, on the one hand, to meet the growing domestic demand for chip manufacturing and improve the self-sufficiency rate of domestic silicon wafers; On the other hand, it is also to compete for a larger share in the domestic market.

In order to seize the window period of downstream demand expansion, the Shanghai silicon industry is also carrying out new capacity deployment, and after the completion of the 300mm silicon wafer production capacity upgrade project for integrated circuits announced in 2024, it will help the company's 300mm silicon wafer production capacity to increase by 600,000 pieces/month on the existing basis to 1.2 million pieces/month.