NAURA invests in CoreSource Micro, accelerating the platformization strategy process

Entering 2025, the domestic semiconductor M&A wave continues. Recently, an announcement by Northern Huachuang showed that the company plans to acquire control of Shenyang Core Source Microelectronics Equipment Co., Ltd. (hereinafter referred to as "Core Source Micro") through the transfer of shares.

The integration of NAURA and CoreSource is not only a capital operation, but also a historical turning point for China's semiconductor equipment industry to shift from "scattered forces" to "group combat." Only through ecological collaboration and resource aggregation can the "low-margin trap" and "single-point substitution dilemma" be overcome.

01, Semiconductor M&A is getting increasingly hot

On June 19, 2024, the CSRC released the "Eight Measures for Deepening the Reform of the STAR Market to Serve Scientific and Technological Innovation and the Development of New Productivity" (referred to as the "Eight Measures for Science"). The Eight Measures for Science are in line with the relevant deployment requirements of the new "Nine National Measures," closely focusing on serving high-level scientific and technological self-reliance and the development of new productivity, and introducing a package of reform measures. In particular, in response to issues frequently raised by the market, such as high-priced over-fundraising of new share issuances, active mergers and acquisitions market, and strengthened supervision of listed companies, the "Eight Measures" have made corresponding arrangements.

Article 8 clearly states, greater support for mergers and acquisitions. Support Sci-Tech Innovation Board listed companies in carrying out M&A integration upstream and downstream of the industrial chain. Increase the valuation tolerance for M&A and reorganization, supporting Sci-Tech Innovation Board listed companies to acquire high-quality unprofitable "hard technology" enterprises. Enrich the payment tools for M&A and reorganization, and conduct research on installment payments of share consideration. Support Sci-Tech Innovation Board listed companies in focusing on optimizing and strengthening their core businesses through absorption mergers.

By the evening of September 24, the China Securities Regulatory Commission issued the "Opinions on Deepening the Reform of the M&A and Restructuring Market for Listed Companies" (referred to as the "Six M&A Provisions"). Among them, it not only clearly supports cross-industry M&As and allows the acquisition of unprofitable assets but also states that it will increase regulatory tolerance, improve transaction efficiency, enhance the service level of intermediaries, and strengthen supervision. This "Six M&A Provisions" clearly support reasonable cross-industry M&As, relax the requirements for acquiring unprofitable assets, and support companies in the "two innovation" sectors to acquire upstream and downstream assets without the need to meet "hard technology" or "three innovations and four news" requirements, which will provide a larger space for the M&A and restructuring market. At the same time, increasing regulatory tolerance and simplifying the review process will also provide more convenience for M&A and restructuring.

The semiconductor market, under favorable factors such as policy support and high demand for AI, is showing a recovery trend in M&A transactions.

According to statistics, in the short span of 3 months after September 24, 2024, 74% of the year's M&A transactions in the integrated circuit industry occurred, totaling 25 deals. In 2024, the disclosed transaction amount was nearly 28 billion. Now, in just over 2 months into 2025, at least 7 M&A transactions have been announced, with a disclosed transaction amount of 14 billion, which is already 50% of the total for 2024. Meanwhile, since 2025, there have been 4 deals initiated in 2024 in the integrated circuit and semiconductor sectors that have been announced as terminated. The ebb and flow, surging forward, and the emergence of M&A among leading listed companies signal that the peak of M&A in the integrated circuit/semiconductor sector has arrived!

02, The M&A Journey of NAURA

Since 2024, the global semiconductor market has rapidly recovered, with a clear trend of industry consolidation. The field of semiconductor equipment is no exception. According to the SEMI report, global semiconductor equipment spending in 2024 is expected to reach a record high of $112.8 billion and will continue to grow over the next three years. China has been the world's largest market for semiconductor equipment for five consecutive years, with a strong demand for domestic production.

Recently, CINNO IC Research released the 2024 global semiconductor equipment manufacturer rankings. As a leading company in semiconductor equipment, NAURA performed outstandingly, with its ranking jumping from eighth to sixth in 2024, becoming a rising "star" in semiconductor equipment. This is inseparable from NAURA's comprehensive layout of various types of semiconductor equipment through mergers and acquisitions.

In 2001, Beijing Sevenstar Huachuang Electronic Co., Ltd. was registered and established. The company was initiated and set up by Beijing Electronics Holding Co., Ltd., integrating the high-quality assets and businesses of the former state-owned factories 700, 706, 707, 718, 797, and 798, with Sevenstar Group as the main sponsor. Sevenstar Group invested its integrated circuit manufacturing equipment, hybrid integrated circuits, and electronic components business into Sevenstar Huachuang.

In 2010, the company was listed on the Shenzhen Stock Exchange. In 2016, the company underwent a strategic reorganization with Northern Microelectronics, becoming a domestic supplier of large-scale, diverse product systems and high-end semiconductor process equipment across multiple fields, and introduced strategic investors such as the National Integrated Circuit Industry Fund. Northern Microelectronics, or Beijing North Microelectronics Base Equipment Technology Research Center Co., Ltd., was jointly established by Beijing Electronics Holding, Qixing Group, Tsinghua University, Peking University, the Institute of Microelectronics of the Chinese Academy of Sciences, and the Institute of Optics and Electronics of the Chinese Academy of Sciences, mainly engaged in high-end semiconductor equipment business.

In 2017, the company was renamed to NAURA Technology Group Co., Ltd., completing the integration of internal business and assets, and launched a new brand "NAURA", forming a business structure with NAURA Technology Group Co., Ltd. as the headquarters, and four wholly-owned subsidiaries: Beijing NAURA Microelectronics Equipment Co., Ltd., Beijing NAURA Vacuum Technology Co., Ltd., Beijing NAURA New Energy Lithium Battery Equipment Technology Co., Ltd., and Beijing Sevenstar Huachuang Precision Electronics Technology Co., Ltd.

In 2018, NAURA completed the acquisition of Akrion Systems LLC, a U.S. semiconductor equipment manufacturer, for $15 million. At an exchange rate of 6.9, this was approximately RMB 104 million. The acquisition, which included Akrion's assets (excluding parent company cash) and non-interest-bearing liabilities, was carried out through the establishment of a wholly-owned subsidiary in the U.S. by its wholly-owned subsidiary, Beijing NAURA Microelectronics Equipment Co., Ltd.

Akrion is a company located in Pennsylvania, USA, focusing on the silicon wafer cleaning equipment business. Its products mainly serve customers in Europe, America, and Asia, and are primarily used in fields such as integrated circuit chip manufacturing, silicon wafer material manufacturing, micro-electromechanical systems, and advanced packaging. Globally, there are over a thousand units of its equipment in use at various customer production sites, with dozens of active customers each year. The company has accumulated many years of technical expertise and a solid customer base in the field of semiconductor wet cleaning technology. Naura believes that the acquired assets complement the company's current range of cleaning equipment well. With the acquisition of Akrion, Naura Microelectronics' product line of cleaning machines will be supplemented, forming a product line that covers 8-12 inch batch and single wafer cleaning machines for applications in the semiconductor industry, including integrated circuits, advanced packaging, power devices, micro-electromechanical systems, and semiconductor lighting.

In 2020, NAURA Microelectronics, a wholly-owned subsidiary of NAURA, acquired RF application technology-related assets from BG Tech. BG Tech's products are mainly applied in three major markets: civilian market, military market, and overseas market. Among them, the civilian market products include broadcasting equipment, RF technology application products, and system engineering. This acquisition improved NAURA's RF application technology level and enhanced its semiconductor equipment technology development and application capabilities.

In December 2024, NAURA uses its wholly-owned subsidiary NAURA Innovation Investment (Beijing) Co., Ltd. as the investment platform, and together with Beijing Electronics Holding Industry Investment Co., Ltd., Beijing State-owned Capital Operation and Management Co., Ltd., and other partners, jointly established the Beijing Integrated Circuit Equipment Industry Investment and M&A Fund Phase II. The Phase II fund mainly invests in the semiconductor field through M&A investments and equity investments, focusing on equipment, components, materials, software, components, and upstream and downstream new technologies, new materials, and new applications.

Recently, Naura Technology plans to acquire a 9.49% stake in Core Source Micro held by Shenyang Advanced Manufacturing for 1.687 billion yuan, and at the same time participate in the bidding for an 8.41% equity transfer from ZKTS. If both transactions are completed, Naura Technology will become the largest shareholder of Core Source Micro with a 17.9% stake, marking that the domestic semiconductor equipment industry is entering a period of deep integration.

Northern Huachuang's M&A strategy mainly draws on the experience of international semiconductor equipment leaders. Taking AMAT as an example, it improved its full-process layout through 12 acquisitions from 1997 to 2011. Northern Huachuang's current integration is benchmarked against the development trajectories of international giants, aiming to become an "all-rounder" in domestic semiconductor equipment.

03, M&A accelerates the platformization process

It is worth noting that regarding the reasons for the implementation of this equity transfer, CoreSource Micro stated in the announcement that it is to respond to the national strategy and promote the integration of semiconductor industry resources. A relevant person from Naura indicated that the products of both parties are complementary and will form business synergy.

Core Micro is expected to leverage the resources and technological advantages of Northern Huachuang for further development.

Core Source Micro focuses on lithography process coating and developing equipment, single-wafer wet processing equipment, and temporary bonding/debonding, and is the only domestic manufacturer of front-end coating and developing machines in mass production. It leads in temporary bonding technology, mainly serving downstream memory/logic manufacturers. Meanwhile, NAURA, as the leading domestic supplier of front-end equipment such as etching and deposition, also covers top-tier domestic memory/logic manufacturers among its clients. Core Source Micro is expected to leverage NAURA's customer resources to further increase the penetration of its equipment among downstream manufacturers, accelerating its penetration into front-end Track, chemical cleaning, and advanced packaging fields against companies like TEL; additionally, Core Source Micro will end its long-term state of having no actual controller, improving decision-making concentration and speeding up technology conversion and market response.

Northern Huachuang accelerates platform construction through acquisitions, improving the industrial chain layout.

NAURA's equipment type proportion reaches 60%, covering silicon etching, dielectric etching, PVD, PECVD, ALD, EPI, MOCVD, LPCVD, and tube CVD, cleaning machines, etc. Referring to the development history of overseas leaders such as AMAT and LAM, it is not difficult to find that platformization is the development trend for leading equipment manufacturers in the semiconductor industry. After this acquisition, NAURA will hold high-quality assets including domestically leading front-end track equipment, chemical cleaning equipment, and temporary bonding/de-bonding equipment that have already achieved mass production/validation orders. After integration, it can provide a full-process solution covering 90nm-5nm processes, further improving NAURA's layout in the semiconductor equipment industry chain, enhancing the collaborative competitiveness of domestic equipment manufacturers in key links. NAURA will also fully benefit from the high-intensity capital expenditures of Chinese local wafer manufacturers.

The integration of NAURA and CoreSource marks the entry of China's domestic semiconductor equipment industry into a new phase of scaled and intensive development. Industry insiders point out that after enterprises mature, integrating resources and increasing market share through mergers and acquisitions is an inevitable trend in the development of the semiconductor industry, and it is also an indispensable step for Chinese semiconductor companies to go global.

This acquisition could draw on the model of Japan's semiconductor industry "invisible alliance" - Tokyo Electron, Dainippon Screen, and Screen have occupied 27% of the global market share through cross-shareholding and technology sharing. If Naura could form a technology alliance with companies like Shanghai Micro Electronics and Advanced Micro-Fabrication Equipment, China's semiconductor equipment industry might be able to carve out a unique path forward.

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