Gold View: Galaxy Microelectronics’ 20% Limit-Up After Resumption Hints at a Move into Higher-End Power Semiconductors

After being suspended for more than half a month, Galaxy Microelectronics (688689.SH) resumed trading after disclosing a restructuring plan. The company plans to acquire 100% of Hengtaike Semiconductor’s equity held by Shanghai Zhineng Hengxin Industrial Electronics Co., Ltd., Gongqingcheng Mingnuo Investment Partnership (LP), and Tianmuyulin (Shanghai) Technology Co., Ltd. through a share issuance, while also raising supporting funds.

On the first day of trading after the resumption, the stock hit the 20% limit-up, closing at RMB 55.88 per share. Its market value rose to about RMB 7.2 billion. Turnover was only 1.21%, while the buy order queue reached 291 million shares, 185 times the day’s trading volume, representing more than RMB 1.5 billion.

Amid a strong upcycle in the power semiconductor industry, the market has reacted positively to this long-established discrete-device maker’s plan to enter the medium- and high-voltage power semiconductor segment through acquisition. However, the deal still faces multiple disputes: suspicion of insider trading triggered by an unusual price surge before suspension, a target valuation that has yet to be finalized, and potentially large future goodwill pressure, all of which add uncertainty to industrial integration.

Jiang Han, a senior researcher at Pangoal Institution, said the biggest integration challenge lies in refined management of product lines and customers. After Hengtaike’s 700-plus products are merged in, the total will exceed 1,000, sharply increasing the complexity of customer management and capacity allocation. Second, core technology is heavily tied to the R&D team; without proper equity incentives and non-compete clauses, the company may face technology loss and goodwill impairment risk.

Acquisition to fill gaps: the real barrier to a technical leap

Compared with some listed-company cross-industry acquisitions with little synergy with the core business, Galaxy Microelectronics’ acquisition of Hengtaike is an industrial deal aimed at filling gaps and creating strong synergies. Once completed, the company is expected to make up for its weakness in medium- and high-voltage power semiconductor technology, fill its high-end product gap and improve its overall product matrix.

Galaxy Microelectronics has long relied on small-signal devices and low-voltage power devices as its core earnings base, but it has been slow to deploy in high-end areas such as high-voltage MOSFETs, IGBTs and silicon carbide (SiC). Technical breakthroughs disclosed on paper have not yet turned into actual earnings, limiting its penetration into high-end markets such as automotive electronics.

Industry-leading capacity continues to come on stream, narrowing the catch-up window for late entrants. According to the restructuring plan, Hengtaike is a national-level specialized, refined, distinctive and innovative “Little Giant” enterprise focused on the research, development and sales of power semiconductor products. Its products are widely used in power supplies, lithium battery protection, brushless motors, new energy and E-car applications such as OBC and motor control.

Hengtaike has industry-leading medium-voltage SGTMOSFET technology and high-voltage SuperJunction technology. Its medium- and high-voltage SGTMOSFETs in the 150V-200V range have reached top domestic levels and can be pin-to-pin benchmarked against and replace Infineon’s medium-voltage series.

This deal is a classic industrial chain integration of “Fabless design + IDM manufacturing”. Galaxy Microelectronics has mature chip manufacturing capacity but lacks advanced design capabilities; Hengtaike has top-tier design technology but no own production line and has long been constrained by foundry capacity and cost swings. The two sides are complementary at the business level, but whether the synergy can be realized depends on the follow-through of integration.

Zhang Jiaming, general manager of the investment department at Guangzhou Ruizhi Venture Capital Management Co., said that for smaller companies, acquisitions can significantly shorten the growth runway and help them form an initial full-industry-chain synergy structure, thereby improving overall strength. But integration risk remains the biggest challenge, and the company must use refined management to deeply merge strengths and reduce internal friction.

Valuation fog and funding pressure: pricing and synergy realization

Potential risks in the deal cannot be ignored. Galaxy Microelectronics warned in the plan that Hengtaike will face two-way competitive pressure from global giants and domestic new entrants. If the global macroeconomy weakens, downstream demand growth slows, or the semiconductor industry enters a deep and prolonged downturn, Hengtaike’s operating performance will be directly affected.

The more critical uncertainty is that the final valuation and consideration for the transaction have not yet been determined. As of the plan signing date, audit and valuation work on Hengtaike is still ongoing, and the transaction price has not been disclosed. The share issue price is set at RMB 28.48 per share, and the shares received by counterparties will be locked up for 36 months. The supporting funds will be used to pay transaction taxes and fees, intermediary fees, project construction costs, supplement working capital and repay debt.

Unaudited figures show Hengtaike’s revenue was RMB 206 million in 2024 and RMB 193 million in 2025. Net profit attributable to shareholders was RMB 32.2325 million and RMB 35.718 million, respectively, indicating stable growth in profitability. By the end of 2025, equity attributable to the parent company was only RMB 416 million, showing clear asset-light characteristics.

Jiang Han pointed out that the valuation of an asset-light semiconductor design company centers on intangible assets such as IP cores and the R&D team. Traditional PE/PB models often fail because of volatile earnings and high upfront investment. A reasonable valuation should be based on multi-stage discounted cash flow (DCF), supplemented by relative valuation cross-checks, while also incorporating qualitative risks such as technology iteration and downstream cyclicality.

From the listed company’s fundamentals, Galaxy Microelectronics’ net profit attributable to shareholders fell year on year in both 2022 and 2023. In 2024, revenue reached RMB 909 million, up 30.75% year on year; net profit attributable to shareholders was RMB 71.8742 million, up only 12.21%. For full-year 2025, revenue rose to RMB 1.05 billion, up 15.46%; net profit attributable to shareholders increased 11.17% to RMB 79.9047 million.

On the funding side, cash and cash equivalents at the end of 2025 were only RMB 137 million, down 44.65% year on year; operating cash flow weakened year by year, with net operating cash inflow of RMB 43.7501 million, down 34.73%.

A private equity industry source said whether the acquisition can realize the industry boom dividend depends on consolidation timing and synergy delivery. Hengtaike has stable revenue and profit, and once consolidated after completion, it can directly boost the listed company’s earnings. But the two companies are both relatively small in scale, and whether they can achieve a “1+1>2” synergy remains uncertain. The biggest risk is a high-premium acquisition that creates substantial goodwill; if performance falls short later, goodwill impairment will erode the listed company’s profits.

Pre-suspension price swings: insider information concerns remain

In addition, unusual price movements before the trading suspension have raised market concerns about possible insider information leakage. Before the suspension announcement, Galaxy Microelectronics’ share price surged sharply on June 10 and 11, jumping nearly 19% over two trading days, with volume rising significantly. During the same period, the semiconductor industry index rose only 2.70%, clearly diverging from the sector and triggering widespread discussion.

In response, the company said in a statement that no insider information leakage or insider trading violations were involved in the transaction. As of June 29, Blue Whale News called Galaxy Microelectronics’ board secretary office, but no reply had been received by press time.