The semiconductor industry has witnessed a surge in mergers and acquisitions (M&A) in 2025, driven by the integration of capital and technology. Expansion has become the central theme for the sector this year. However, while some companies have successfully capitalized on this trend, others have faced setbacks.
Kangda New Materials, for instance, ventured into the semiconductor space by acquiring companies like Bikong Technology, Caijing Optoelectronics, and Jingcai Technology. Despite these efforts, its profitability has continued to decline, with net profits attributable to shareholders turning negative from 2022 to 2024, largely due to significant goodwill impairments. In August 2025, Kangda announced plans to acquire at least a 51% stake in Beiyi Semiconductor for over 275 million yuan, aiming to further its semiconductor transformation. However, the deal was terminated on November 13, citing unsatisfactory progress in due diligence and audit processes, as well as disagreements among the parties involved.
**Capital in Motion** As the year draws to a close, major M&A announcements have intensified. On November 27, power management chip leader HLW Microelectronics saw its 310 million yuan acquisition of Chengxin Microelectronics gain regulatory approval. On November 25, SiRuipu announced plans to acquire an 86.12% stake in Aura Semiconductor to strengthen its position in analog chips. The same day, Puren Semiconductor disclosed plans to acquire the remaining 49% stake in Zhuhai Nuoya Changtian, following its earlier purchase of a 31% stake for 144 million yuan, which gave it control over SK Hynix’s former subsidiary SkyHigh Memory Limited (SHM).
Guangku Technology also made headlines with its 1.64 billion yuan acquisition of Anjiexun at a 630% premium, reinforcing its foothold in optical communications.
Given the semiconductor industry’s rapid technological evolution, lengthy R&D cycles, and challenging market penetration, M&A has emerged as a pragmatic strategy for growth. According to PwC, China’s M&A market reached over $170 billion in the first half of 2025, a 45% year-on-year increase, driven by strategic investments in high-tech, healthcare, and industrial sectors.
Wu Zewei, a researcher at Suzhou Merchant Bank, noted that semiconductor companies are prioritizing M&A to quickly acquire technology and secure strategic market positions.
**Synergy as the Foundation** Successful M&A deals hinge on synergy rather than mere scale expansion. For example, HLW Microelectronics’ acquisition of Chengxin Microelectronics complements its existing product portfolio and expands its reach into automotive and industrial applications. Similarly, Southchip Semiconductor’s acquisition of Zhuhai Shengsheng Microelectronics has bolstered its product lineup, enabling integrated solutions for clients.
Wu emphasized that in emerging fields like AI and smart vehicles, M&A helps companies overcome R&D bottlenecks and build comprehensive solutions. Vertical integration also enhances supply chain security and cost efficiency.
**Hidden Risks in Expansion** Not all M&A efforts yield positive outcomes. Kangda New Materials’ repeated struggles highlight the challenges of post-acquisition integration, particularly when targets fail to meet performance expectations. In 2024, the company recorded a 155 million yuan goodwill impairment, with acquired subsidiaries like Bikong Technology and Jingcai Technology underperforming.
Despite these setbacks, Kangda’s operating cash flow surged to 499 million yuan in 2024, providing some financial flexibility. However, its failed acquisition of Beiyi Semiconductor underscores the importance of thorough due diligence and realistic performance assessments.
Industry experts caution that while M&A can accelerate growth, companies must carefully evaluate target compatibility, integration capabilities, and market conditions to avoid unnecessary risks.
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