On the evening of October 17, 2025, leading consumer electronics manufacturer Goertek Inc. announced the termination of its billion-level acquisition plan that had been in progress for three months. The company intended to acquire 100% equity in Mia Precision Technology Co., Ltd. and Changhong Industrial Co., Ltd., both subsidiaries of Lianfeng Commercial Group, for HKD 10.4 billion (approximately RMB 9.5 billion). This decision ends Goertek’s significant acquisition attempt initiated in July 2025 and has sparked in-depth scrutiny from the market regarding its strategic transformation path.
Termination of Acquisition: Rational Stop Loss Amid Key Clause Discrepancies According to the announcement, Goertek conducted due diligence, auditing, and assessment with the transaction parties in an orderly manner but had to terminate cooperation due to "inconsistencies in key terms." The acquisition was originally designed to enhance technical capabilities and production capacity in the field of precision metal structural components. The target companies reported a combined revenue of HKD 9.11 billion (approximately RMB 8.3 billion) in 2024, accounting for about 8% of Goertek’s total revenue during the same period.
However, several considerations lay behind the termination. First, the financial pressure cannot be underestimated. By mid-2025, Goertek had cash reserves of RMB 20.179 billion, but interest-bearing liabilities had reached RMB 16.133 billion. A one-time payment of RMB 9.5 billion for the acquisition would further exacerbate its debt asset ratio (already at 59.69%) and liquidity risk. Second, potential risks associated with the target companies have surfaced: Mia Precision Metal Technology (Dongguan) Co., Ltd. has 24 filed cases, 6 court announcements, and 5 litigations that could impact its actual profitability; Changhong Industrial focuses on tool manufacturing, which has relatively low technical barriers, raising concerns about its market competitiveness.
Strategic Shift: From External Mergers to Internal Growth Despite the termination of the acquisition, Goertek's transformation has not stalled. The company is simultaneously advancing two key initiatives: first, through its subsidiary Goertek Optics, it is investing RMB 1.903 billion to acquire 100% equity in Shanghai Aolai to strengthen its competitiveness in wafer-level micro-nano optical devices, supporting technologies for AI smart glasses and AR applications. In February 2025, Goertek Optics launched a new AR full-color waveguide display module, overcoming technical bottlenecks. Second, Goertek Microelectronics submitted a listing application to the Hong Kong Stock Exchange in July, aiming to expedite the development of core components like MEMS sensors through independent financing, thus reducing reliance on group funds.
From a financial perspective, Goertek's transformation is showing early signs of success. In the first half of 2025, the company achieved revenue of RMB 37.549 billion, with a net profit of RMB 1.417 billion, representing a year-on-year increase of 15.65%. The precision components business segment generated revenue of RMB 15.051 billion, with a gross profit margin of 21.51%, becoming the fastest-growing segment.
In Conclusion In the context of this billion-dollar acquisition's “entry and retreat,” Goertek Inc. has demonstrated the strategic resilience of a leading player in China’s manufacturing sector amid global competition—it neither expands blindly nor sticks to conventional practices, but rather writes a new chapter in its transformation from a "contract manufacturing giant" to a "technology platform" with prudent capital allocation and forward-looking technological layout.
Note: This article incorporates AI-generated content, and the views expressed do not constitute investment advice, for reference only. Market risks exist, and investment requires caution.
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