China Micro Semicon (Shenzhen) Limited (688380.SH) has announced plans to invest 160 million yuan of its own funds to increase capital in Zhuhai Boya. Upon completion of the transaction, the company will hold a 20.00% stake in Zhuhai Boya.
Established in 2014, Zhuhai Boya is a chip design company founded with participation by overseas returnee doctoral graduates. It is a national high-tech enterprise specializing in the research, development, and design of memory chips such as NOR Flash. The company holds multiple recognitions, including status as a National Specialized, Refined, Distinctive, and Emerging SME (Little Giant), a Guangdong Provincial Doctoral Workstation, a Guangdong Provincial Engineering Center, and a Guangdong Provincial Industrial Design Center.
Zhuhai Boya conducts research and design based on two different NOR Flash process architectures: ETOX and SONOS. Its products are mass-produced using 65nm, 55nm, 50nm, and 40nm process technologies, covering a full capacity range from 512Kb to 2Gb with multiple product categories. These products offer advantages such as high speed, low power consumption, high reliability, wide temperature/voltage tolerance, full compatibility with international brands, and competitive cost-effectiveness. They are widely used in consumer electronics, industrial control, communication equipment, and automotive electronics, primarily for storing boot code and firmware. Representative customers include Renesas, Tuya, and Lihe Micro.
The announcement noted that the target company's revenue for the years 2023 to 2025 is projected to be only 180 million yuan, 170 million yuan, and 197 million yuan, respectively. Its gross profit margins for these periods are -14.24%, 4.10%, and 12.39%, indicating a relatively small scale and margins below the industry average. The company has also been in a loss-making state for three consecutive years.
The announcement stated that China Micro Semicon's business has strong synergies and complementarity with the target company. The core product of China Micro Semicon, the MCU, serves as the main control chip required for intelligent control. With increasing demand for computing power due to automation and intelligence, both controllers and MCUs require larger storage capacity, and MCUs are often used in conjunction with memory chips. Consequently, the company has positioned the research, design, and sales of memory chips as a strategic component of its "MCU+ Strategy." However, China Micro Semicon's involvement in the memory chip sector is relatively recent, with limited technical accumulation and insufficient mass production experience.
In contrast, Zhuhai Boya has over a decade of experience in the design, development, and sales of memory chips. Its team possesses expertise in product development, design, mass production, market promotion, and sales for ETOX and SONOS architectures across process technologies from 65nm to 40nm. It has established mass production collaborations with multiple wafer foundries and has built a certain customer base in the memory chip market. MCUs and memory chips share a common customer foundation.
The equity investment in the target company is expected to facilitate close cooperation between the two firms, enabling effective integration of their industrial resources. This move will help accelerate the implementation of China Micro Semicon's "MCU+ Strategy" and speed up the validation, adoption, and market expansion processes for relevant customers.
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