Galaxy Microelectronics Hits 20% Limit-Up on Resumption: M&A Into High-End Power Semiconductors
After being suspended for more than half a month, Galaxy Microelectronics (688689.SH) disclosed a restructuring proposal and hit the 20% limit-up on its first day back on the market. The company plans to acquire 100% of Hengtai Ke Semiconductor through a share issuance, buying the equity held by Shanghai Zhineng Hengxin Industrial Electronics Co., Ltd., Gongqingcheng Mingnuo Investment Partnership (LP), and Tianmuyulin (Shanghai) Technology Co., Ltd., while also raising supporting funds.
On the day trading resumed, the stock hit the 20% limit-up, closing at S$55.88 per share and lifting its market value to about S$7.2 billion, with turnover at just 1.21%. The buy order on the limit-up board reached 291 million shares, 185 times the day's traded volume, representing more than S$1.5 billion of funds, showing intense buying interest.
Against a strong cycle in the power semiconductor industry, the market has reacted positively to Galaxy Microelectronics' plan to enter the mid- to high-voltage power semiconductor segment through this acquisition. However, the deal still faces several controversies, including suspicions of insider trading triggered by an unusual pre-suspension surge, the yet-to-be-finalized valuation of the target, and possible heavy goodwill pressure later on.
Jiang Han, a senior researcher at Pangoal Institution, said the biggest integration challenge lies in fine-grained management of the product line and customers. After Hengtai Ke's products are combined, the catalog will exceed 1,000 SKUs, which will significantly raise the complexity of customer management and capacity allocation. Second, its core technology is tightly tied to its 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: A Technology Leap Still Faces Real Barriers
Compared with cross-industry acquisitions that have limited synergy with the core business, this deal is a same-industry acquisition aimed at filling gaps and strengthening synergy. If completed, it could quickly shore up Galaxy Microelectronics' weak spots in mid- and high-voltage power semiconductor technology, fill gaps in high-end products, and complete its overall product matrix.
Galaxy Microelectronics, a discrete semiconductor company that listed on the STAR Market in 2021, has long relied on small-signal devices and low-voltage power devices as its core earnings base. But its layout in high-end areas such as high-voltage MOSFETs, IGBTs, and silicon carbide (SiC) has been relatively slow. The technological breakthroughs disclosed on paper have not yet been translated into actual earnings, limiting its penetration into high-end markets such as automotive electronics.
Industry leaders have built closed-loop chains across materials, process, and manufacturing, while domestic IDM leaders are also pushing ahead with mass production of high-voltage MOS and IGBT products, narrowing the catch-up window for latecomers. In this context, Hengtai Ke has become a key lever for Galaxy Microelectronics to break through its technical bottleneck.
According to the restructuring proposal, Hengtai Ke is a national-level "little giant" enterprise specializing in power semiconductor product research, development, and sales. Its products are used in power supplies, lithium battery protection, brushless motors, new energy, and E-car fields such as OBC and motor control. Hengtai Ke has industry-leading mid-voltage SGTMOSFET technology and high-voltage SuperJunction technology. Its mid- to high-voltage SGTMOSFETs in the 150V-200V range have reached top domestic levels and can be directly pin-to-pin benchmarked against and replace Infineon's mid-voltage series.
This transaction integrates the "Fabless design + IDM manufacturing" chain: Galaxy Microelectronics has mature chip manufacturing capacity but lacks high-end design capability, while Hengtai Ke has top design technology but no own production lines 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 still depends on post-deal integration.
Valuation Fog and Funding Pressure: Key Variables in the Deal
Valuation and risk are among the uncertainties in this acquisition round. The proposal warns that Hengtai Ke will face pressure from both global giants and domestic rising challengers; if the global macroeconomy weakens, downstream demand growth slows, or the semiconductor industry enters a deep and prolonged downturn, Hengtai Ke's operating performance will be affected.
The more critical uncertainty is that the final valuation and consideration have not yet been determined. As of the proposal signing date, audit and appraisal work on Hengtai Ke was still ongoing, and the deal price has not been disclosed. The share issue price has been set at S$28.48 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, project construction for the target, and to replenish working capital and repay debt.
Unaudited data show that Hengtai Ke recorded revenue of S$206 million in 2024 and S$193 million in 2025; net profit attributable to parent company shareholders was S$32.23 million and S$35.72 million, respectively. Profitability has been steadily growing. By the end of 2025, shareholders' equity in the parent company was only S$416 million, indicating a notably asset-light profile.
When discussing the valuation of asset-light semiconductor design firms, Jiang Han said the core of valuation lies in intangible assets such as IP cores and the R&D team. Traditional PE/PB models may fail when earnings are volatile and upfront investment is high. A more reasonable valuation should be based on a multi-stage discounted cash flow (DCF) model, supplemented by relative valuation for cross-checking, while also quantifying qualitative factors such as technology iteration risk and downstream cyclical demand.
On the listed company's fundamentals, Galaxy Microelectronics' net profit attributable to parent shareholders fell year on year in both 2022 and 2023. In 2024, the company posted revenue of S$909 million, up 30.75% year on year; net profit attributable to parent shareholders was S$71.87 million, up only 12.21%. In 2025, revenue reached S$1.05 billion, up 15.46%, and net profit attributable to parent shareholders was S$79.90 million, up 11.17%, showing a further slowdown in growth momentum.
Financial pressure has also become visible. By the end of 2025, Galaxy Microelectronics had cash and cash equivalents of only S$137 million, down 44.65% year on year. Operating cash flow weakened year by year, with net operating cash inflow last year at S$43.75 million, down 34.73% due to longer payment cycles from downstream customers and higher inventory buildup.
A private fund industry insider said the key to whether the acquisition can deliver the benefits of the industry upswing lies in the pace of consolidation and synergy realization. Hengtai Ke has stable revenue and profit, and once delivered and consolidated it can directly boost the listed company's earnings. But the two companies are relatively small, and the synergy may not necessarily be greater than the sum of its parts. The biggest risk is that a high-premium acquisition creates heavy goodwill; if future performance falls short of expectations, goodwill impairment will erode the listed company's profits.
Pre-Suspension Stock Moves Draw Attention: Insider Information Concerns Await Response
In addition, the unusual stock movement before the suspension has raised market concerns about possible leakage of insider information. Before the suspension announcement, Galaxy Microelectronics' stock surged sharply on June 10 and 11, rising nearly 19% over two trading days with a significant jump in volume; meanwhile, the semiconductor industry index rose only 2.70%, showing a clear divergence from the sector. The company said in its explanation that the parties involved in the transaction did not engage in insider information leakage or insider trading.
As of press time, Blue Whale News had called Galaxy Microelectronics' board secretary office but had not received a response.
