HC SemiTek Acquisition Approved by CFIUS, LED + Sensor Dual Business Development

HC SemiTek disclosed on the 9th that the company received a confirmation letter from CFIUS on May 9. The company's acquisition of 100% equity of Hexin Xingguang (Yiwu) Optoelectronics Technology Co., Ltd., and the acquisition of 100% equity of MEMSIC, Inc. (Meixin Semiconductor) by a subsidiary of Hexin Xingguang has passed the CFIUS review.

HC SemiTek's move is considered by the industry as an event of major significance in China's semiconductor industry's overseas M&A activities in recent years, with the CFIUS review being the key. According to a person close to the company, after passing the CFIUS review, there are almost no obstacles to this acquisition, with only the completion of the corresponding procedures as required.

Reviewing the announcement, in October 2016, HC SemiTek disclosed a major asset restructuring plan, intending to purchase 100% equity of Hexin Optoelectronics, thereby achieving the goal of acquiring the target company MEMSIC. The previous transaction of this deal was the cash acquisition of 100% equity of MEMSIC, Inc. by a subsidiary of Hexin Xingguang (Yiwu) Optoelectronics Technology Co., Ltd.

MEMSIC is a technology-leading company in the global Micro-Electro-Mechanical Systems (MEMS) sensor industry. It is a company capable of achieving large-scale MEMS mass production using standard CMOS processes. By adopting standard CMOS integrated circuit processes to monolithically integrate MEMS and ASIC circuits on a single chip, and combining MEMS structures with CMOS standardized processes at the wafer level, MEMSIC can leverage off-the-shelf equipment and CMOS-compatible manufacturing workflows to produce sensors that are small, lightweight, low-cost, and suitable for mass production. Its application areas span consumer electronics, automotive electronics, and industrial control, among others.

According to Zhao Yang, Chairman of MEMSIC, what differentiates MEMSIC from its current competitors is that over the past seventeen years the company has been committed to the R&D and application of monolithic integration technology for MEMS and microelectronics, namely MEMSSOC. At the same time, MEMSIC's patents and technologies in monolithic integration of inertial MEMS and wafer-level packaging are leading internationally, and it is also the only company to have achieved mass production based on this combination of technologies. "This is the core foundation that has enabled MEMSIC to continuously maintain product competitiveness and profitability over the years. Our next step will be to expand into 6-axis and 9-axis monolithic integrated products."

According to reports, upon completion of this acquisition, Huacan Optoelectronics will be able to rapidly enter the promising MEMS sensor field, further expand its integrated circuit industry-related business, and achieve diversified extension-type development.

Liu Rong, President of Huacan Optoelectronics, stated that after the company's capital-intensive investment in the LED industry, in order to drive the company's development, it hoped to introduce some new businesses, but the new businesses could not be too far removed. Therefore, it acquired MEMSIC. "Because both are in the semiconductor industry—one is LED, the other is sensors—and the two industries share a lot in common, and there is much complementarity between us. MEMSIC's strengths lie more in the international market, which is precisely what Huacan lacks. In the future, we can leverage MEMSIC's channels to enter the international market."

Sensors are playing an increasingly important role in the development of the Internet of Things (IoT). Currently, demand for sensor products is growing significantly, with focus gradually shifting toward the higher-technology MEMS sensor field. Compared with traditional mechanical sensors, MEMS sensors feature small size, light weight, low cost, low power consumption, and ease of integration. As a sub-sector within the semiconductor industry chain, the MEMS sensor field has very broad application prospects in aviation, aerospace, automotive, biomedical, environmental monitoring, military, and consumer electronics commonly used in people's daily lives. With the advent of the intelligent era, the rapid development of consumer electronics, medical electronics, and the IoT is expected to drive MEMS sensors into a new round of rapid growth.

In addition, HC SemiTek also announced that its wholly-owned subsidiary HC SemiTek (Zhejiang) Co., Ltd. recently received an industry development subsidy of 37.5 million yuan for the first quarter of 2017; the company's secondary subsidiary BluCrystal Technology (Yiwu) Co., Ltd. recently received an industry development subsidy of 12.5 million yuan for the first quarter of 2017. These subsidies will have a positive impact on the company's performance in 2017.