A Case Study On The M&A Of Beijing Xicheng Semiconductor Co. By Ingenic Semiconductor Co.

In the development of modern economy and society,semiconductor industry is a basic,leading and strategic industry.Semiconductor is the basic component of various electronic products,supporting the development of the whole information society.In recent years,with the impact of Sino US science and technology war,"chip" has become the focus of national attention.The US crackdown on China's semiconductor industry has made us realize that the semiconductor industry must be controlled independently.However,the semiconductor industry has obvious threshold characteristics,such as high industry barriers,great technical difficulties,and it is difficult to completely take the road of independent research and development.Therefore,in recent years,with the strong support of national policies and the trend of domestic chip substitution,many domestic semiconductor enterprises have rapidly gathered profitable resources and advanced technologies through mergers and acquisitions and industrial integration In order to strengthen the development and enhance the competitiveness of the industry.In the past research literature of M&A in semiconductor industry,more empirical research is carried out from the perspective of the industry as a whole to explore the impact of M&A on enterprises from the perspective of the industry;in case studies,it mainly focuses on the valuation or performance of M&A cases,and less covers many aspects of M&A cases.This paper takes Ingenic Semiconductor Co.'s merger and acquisition of Beijing Xicheng Semiconductor Co.as the research object.The merger and acquisition case lasts from November 2018 to may 2020.Due to the long duration and the special characteristics of the target enterprise,the merger and acquisition activity has been widely concerned by the market and has become a typical case of many mergers and acquisitions in the semiconductor industry in recent years.This paper takes this case as a miniature of the semiconductor industry,comprehensively studies the motivation,risk,valuation and performance of M&A,and provides some reference for the follow-up M&A events of the semiconductor industry in the wave of domestic chip substitution.By combing the motivation,risk,valuation and performance of this M&A,this paper expounds the whole M&A process and the short-term results after the M&A in detail.In the risk analysis,it highlights the industry specific cyclical risk and the supplier risk of fabless mode adopted by Beijing Xicheng Semiconductor Co.,and expounds the development status and competition pattern of the semiconductor industry in detail.The income method and market method are used in the valuation.In the income method,the key parameters are carefully selected,the free cash flow and cost of capital of the target company are reasonably predicted,and the sensitivity analysis of the valuation results is carried out to obtain the corresponding valuation range.In the evaluation of market method,the method of fuzzy mathematics is used to objectively weight the comparable companies,three profit value ratios are selected for valuation,and the liquidity discount is adjusted to make the valuation results more scientific and reasonable.Finally,the performance of this M&A is studied.The purpose of performance research is to explore the capital market's response to this M&A and whether this M&A has a synergistic effect on Ingenic Semiconductor Co.'s performance.Using the event analysis method to analyze the short-term market reaction of M&A,it is found that the market has given a positive response after the announcement of the two M&A plans,and the stock price of Ingenic Semiconductor Co.has risen sharply before and after the adjustment of the restructuring plan.On the basis of the comparative analysis of the performance of Ingenic Semiconductor Co.and the domestic chip design industry by factor analysis,it is found that the Ingenic Semiconductor Co.is rising in the short term after the merger.However,due to the impact of the United States on China's semiconductor industry and the influence of COVID-19,the synergistic effect of M&A has not been fully demonstrated.Through the above research,this paper believes that Ingenic Semiconductor Co.'s merger and acquisition of Beijing Xicheng Semiconductor Co.is a relatively successful merger and acquisition,with obvious synergistic effect,but the long-term performance still needs to be observed.Although the semiconductor industry is limited by the double impact of Sino US technology war and COVID-19,the trend of chip import substitution and artificial intelligence,Internet of things,big data,5G and so on become the core growth power,and the synergy effect of the merger will be further revealed in the future.