Behind Galaxy Microelectronics’ “20CM” limit-up on trading resumption: merger with Hengtai Ke to enter the advanced medium- and high-voltage power semiconductor track

After more than half a month of suspension, Galaxy Microelectronics (688689.SH) disclosed its restructuring plan and resumed trading today. The company plans to acquire 100% of Hengtai Ke Semiconductor held by three shareholders—Shanghai Zhineng Hengxin Industrial Electronics Co., Ltd., Gongqingcheng Mingnuo Investment Partnership (Limited Partnership), and Tianmu Yulin (Shanghai) Technology Co., Ltd.—through a share issuance, while also raising supporting funds.

On the first day of resumption, the stock hit a “20CM” limit-up, closing at 55.88 yuan per share. The company’s market capitalization rose to about 7.2 billion yuan, with turnover of only 1.21%. Limit-up orders reached 291 million shares, 185 times the day’s trading volume, representing more than 1.5 billion yuan in locked funds.

Amid a strong upcycle in the power semiconductor industry, the market has responded positively to this long-established discrete-device maker’s plan to enter the medium- and high-voltage power semiconductor field through acquisition. However, the deal still faces multiple controversies: suspicions of insider trading triggered by an unusual pre-suspension stock surge, the target valuation still undecided, and potential large-scale goodwill pressure in the future, all adding uncertainty to industrial integration.

Jiang Han, a senior researcher at Pangoal Institution, pointed out that the biggest integration challenge in this transaction lies in the refined management of product lines and customers. After more than 700 products from Hengtai Ke are folded in, the total will exceed 1,000, sharply increasing the complexity of customer management and capacity allocation. Second, core technologies are highly tied to the R&D team. Without reasonable equity incentives and non-compete clauses, the company may face technology leakage and goodwill impairment risks.

Acquisition to fill gaps: real barriers to a technology leap

Galaxy Microelectronics’ acquisition of Hengtai Ke is an industry acquisition aimed at filling gaps and strengthening synergies. Once the transaction is completed, the company is expected to quickly make up its shortcomings in medium- and high-voltage power semiconductor technology, fill gaps in high-end products, and improve its overall product matrix.

Galaxy Microelectronics, a semiconductor discrete-device company listed on the STAR Market in 2021, has long relied on small-signal devices and low-voltage power devices as its core performance base. However, its presence in high-end areas such as high-voltage MOSFETs, IGBTs, and silicon carbide (SiC) has progressed slowly, and the technical breakthroughs disclosed on paper have not yet translated into actual performance, limiting its penetration into high-end markets such as automotive electronics.

Leading industry capacity continues to be released, while the window for catch-up narrowing. International giants have built a full-chain technology loop covering materials, processes, and manufacturing, and domestic IDM leaders have already achieved mass production of 8-inch high-voltage MOS and IGBT products.

Against this backdrop, Hengtai Ke has become a key lever for Galaxy Microelectronics to break through its technological bottleneck. According to the restructuring plan, Hengtai Ke is a national-level specialized, sophisticated, distinctive, and innovative “Little Giant” enterprise, primarily engaged in the research, development, and sales of power semiconductor products. Its products are used in various power supplies, lithium battery protection, brushless motors, new energy, and e-car applications (OBC, motor control), among others. Hengtai Ke possesses medium-voltage SGTMOSFET technology and high-voltage Super Junction technology. In the 150V-200V range, its medium- and high-voltage SGTMOSFET products have reached top domestic standards and can directly match and replace Infineon’s medium-voltage series on a pin-to-pin basis.

This transaction represents an industry-chain integration of “Fabless design + IDM manufacturing.” Galaxy Microelectronics has mature chip manufacturing capacity, but lacks high-end design capabilities; Hengtai Ke has top-tier design technology, but no in-house production line and has long been constrained by foundry capacity and cost fluctuations. Their businesses are complementary, but whether the synergies can be realized depends on the follow-up integration.

Zhang Jiaming, general manager of the investment department, believes the biggest advantage of M&A for small and medium-sized companies is shortening the development timeline. M&A can help such companies initially form a full-industry-chain synergy framework and enhance comprehensive strength.

At the same time, Zhang also stressed that integration risk is the biggest challenge. Two or more companies may differ greatly in organizational structure, corporate culture, team integration, and R&D paths. Only by deeply integrating strengths through refined management and reducing internal friction can strategy be effectively implemented.

Valuation fog and funding pressure: deal price still undecided

Galaxy Microelectronics warned in the plan that Hengtai Ke will face dual competitive pressure from international giants and emerging domestic players; if the global macroeconomy weakens, downstream demand growth slows, or the semiconductor industry enters a deep and prolonged downturn, Hengtai Ke’s operating results will be affected.

The more core uncertainty is that the final valuation and consideration for the deal have not yet been disclosed. As of the date the plan was signed, audit and valuation work for Hengtai Ke was still underway, and the transaction price had not yet been announced. The share issue price is 28.48 yuan per share, and the shares received by the counterparties will be locked up for 36 months. The supporting funds will be used to pay transaction taxes and fees, intermediary costs, and project construction costs, as well as to replenish the listed company’s working capital and repay debt.

Unaudited data show that Hengtai Ke’s operating revenue in 2024 and 2025 was 206 million yuan and 193 million yuan, respectively; net profit attributable to the parent company was 32.2325 million yuan and 35.718 million yuan, respectively, with profits maintaining steady growth. As of the end of 2025, Hengtai Ke’s parent-company equity was only 416 million yuan, reflecting a distinctly asset-light profile.

Jiang Han noted that the valuation core of an asset-light semiconductor design company lies in intangible assets such as IP cores and R&D teams. Traditional P/E and P/B models often fail because of large earnings volatility and heavy upfront investment. A reasonable valuation should be based on a multi-stage discounted cash flow (DCF) model, supplemented by relative valuation cross-checks. Qualitative factors such as technology iteration risk and downstream application cyclicality must also be included in quantitative assessment; one should not simply refer to book net assets or short-term profits.

From the listed company’s fundamentals, Galaxy Microelectronics’ net profit attributable to the parent company declined year over year in both 2022 and 2023. In 2024, the company achieved operating revenue of 909 million yuan, up 30.75% year over year; net profit attributable to the parent company was 71.8742 million yuan, up only 12.21%. In 2025, full-year revenue reached 1.05 billion yuan, up 15.46%; net profit attributable to the parent company was 79.9047 million yuan, with growth slowing to 11.17% year over year, indicating a weakening overall growth momentum.

On the funding side, the company’s cash and cash equivalents were only 137 million yuan, down 44.65% year over year, and operating cash flow has weakened year by year. Last year, net operating cash inflow was 43.7501 million yuan, down 34.73%, partly due to longer payment cycles from downstream customers and higher inventory building.

Private equity practitioners believe that whether the merger can translate the industry upcycle into benefits depends on the pace of consolidation and realization of synergies. Hengtai Ke has stable revenue and profit, and after closing and consolidation it can directly boost the listed company’s performance. However, both companies are relatively small and neither is an industry leader, so the synergy effect of “1+1>2” remains uncertain. The biggest risk is that a high-premium acquisition creates substantial goodwill, and if later performance falls short of expectations, goodwill impairment will erode profits.

Stock price anomaly before suspension draws attention: debate over possible insider information

In addition, the stock price anomaly before the suspension related to this transaction has raised market concerns about possible insider information leakage. Before the suspension announcement was released, Galaxy Microelectronics’ share price surged sharply on June 10 and 11, rising nearly 19% cumulatively over two trading days, with a significant increase in trading volume. Over the same period, the semiconductor industry index rose only 2.70%, diverging from the industry trend. The company stated in its explanation that there was no insider information leakage, insider trading, or other violations involving the parties related to this transaction.

In response to market concerns, on June 29, Blue Whale News called Galaxy Microelectronics’ board secretary office, but no reply had been received as of press time.