In April of this year, in the Ziguang Group exhibition area of ​​the 7th China Electronic Information Expo, Caijing reporter found that French chip component company Linxens exhibited a variety of products as a subsidiary of Ziguang Group, which means that Ziguang Group has completed the Linxens. The acquisition, "Financial" reporter comprehensive interview information learned that the specific acquisition time node should be 4 months ago.

In July last year, the outside world began to rumor that Ziguang Group will acquire the French chip component manufacturer Linxens, but both parties to the transaction declined to comment. At that time, some media analyzed that the transaction was subject to the approval of the German and French regulators and the Linxens trade union. Therefore, it is unknown whether the transaction can be successfully completed.

However, when the news came out on July 25 last year, Ziguang shares once reached a daily limit, and Ziguang Guowei also rose nearly 7%.

But so far, the Violet Group and Linxens remain the most silent. Both parties are not listed companies and have no obligation to disclose their company's investment behavior. The Caijing reporter only found some details of the transaction in a public company announcement of Ziguang Guowei (002049.SZ), a wholly-owned subsidiary of Ziguang Group.

The announcement was published on December 28, 2018. The core content is to inform the related transactions between Ziguang Guowei and Linxens Suzhou subsidiary Lixin, and part of the acquisition of Linxens by Ziguang Group. The announcement mentioned that “Ziguang Group holds Financière Lully A SAS, Financière Lully A SAS, through its indirect holding subsidiary Beijing Ziguang Liansheng Technology Co., Ltd., and holds a 82.3% stake in Linxens Singapore through Linxens France SA and holds Linxens through other subsidiaries. 17.7% of Singapore's equity, holding a total of 100% of its equity."

The Caijing reporter found that the transaction amount was about 2.2 billion euros (2.6 billion US dollars). This acquisition is the largest of all the overseas acquisitions announced by Ziguang Group.

Founded in the 1980s and headquartered in France, Linxens designs and manufactures micro-connectors for a variety of smart IC cards. Many smart card manufacturers, chip manufacturers and module manufacturers worldwide are users. In 2017, Linxens acquired the SIT division of Smartrac, another company that is leading the way in the development of RFID (radio frequency identification) antennas. RFID transponders have become another major product of Linxens, producing about 800 million per year, and the production capacity in the RFID industry. The largest, Linxens has thus become the world's largest manufacturer of smart card devices.

Linxens is not listed. According to official data, the company currently has more than 3,000 employees, and has seven production bases and four R&D centers in the world. The revenue in 2018 is close to 500 million euros.

From the perspective of revenue, this chip component company is not large. A number of people from the Ziguang Group commented to the Caijing reporter that this is an invisible champion in the industry. Linxens data shows that since its inception, the company has provided more than 90 billion micro connectors to the market and claims that 80% of the world's people use its products. This is not an exaggeration, and each of our bank IC cards is very likely to use the Linxens micro-connector.

Chen Feng, vice president of Ruixin Microelectronics, a Chinese chip design company, commented on the Caijing reporter that the chip industry chain is huge and complex, and the division of labor is extremely fine. Some small components are large, and the unit price is not high, but so many products can be produced globally. This is also very valuable. Many people only see China lacking high-end chips. This one is actually quite lacking.

Another industry person analyzed the "Financial" reporter, Ziguang Group has already completed the card position in the key points of chip design, manufacturing, packaging and testing, etc. Now, the chip component supplier has taken the lead to further improve the overall chip layout. From the perspective of business complementarity, Ziguang Guowei, a subsidiary of Ziguang Group, is more likely to benefit.

There are two main chip design companies in the Ziguang Group's business, namely Ziguang Zhanrui and Ziguang Guowei. Ziguang Zhanrui mainly designs smart phone chips and IoT chips, and is one of the top ten chip design companies in the world. Ziguang Guowei is mainly engaged in the design and development of security chips, with a total revenue of 2.46 billion yuan in 2018, belonging to Chinese listed companies. Leading chip design company.

According to the data, Ziguang Guowei smart card chip business covers financial IC card, ID card, transportation card, social security card, USB-Key, intelligent POS machine, non-contact reading and writing machine and other industrial markets. The revenue in 2018 reached 1.036 billion yuan. It is the largest contribution to Ziguang Guowei's revenue.

Linxens micro-connectors and related solutions help Ziguang Guowei to make more customized designs, and Linxens has been developing new technologies to support next-generation smart cards with biometrics such as fingerprint recognition.

For smart card companies such as Ziguang Guowei and National Technology (300077), this is also an important market opportunity period, that is, a new wave of smart card exchange is coming.

For example, the Ministry of Human Resources and Social Security of China began issuing third-generation social security cards in 2017. For the next three to five years, social security cards will usher in a card exchange. In terms of urban transportation cards (one card), the Ministry of Communications is setting new standards for the card, and said that by 2020, the country's urban and rural interconnection will be basically realized, which means that the transportation card will also face the tide of card exchange; ID cards are facing expiration and renewal, and Great Wall Securities expects that ID card shipments will increase by 50% from 2017 to 2019. In addition, in terms of financial IC cards, the localization ratio will increase.

Since 2011, China's major banks have gradually stopped issuing magnetic stripe bank cards and replacing them with more secure financial IC cards. However, financial IC card chips must accept various security certifications at home and abroad, and the threshold is high. China's smart card chip companies started to accumulate thin and missed opportunities. Therefore, before 2015, more than 90% of the billion financial IC cards that have been issued are used by NXP's security chips from the Dutch company (NXP is a big customer of Linxens), and the remaining share is mainly from Germany's Infineon. Ling and South Korea Samsung are divided.

After nearly ten years of catching up, the product level of China's smart card chip companies is no longer a problem. Du Linhu, vice president of Ziguang Guowei, responded to investors' questions in May 2018, saying that the company's financial card chips have passed all financial security certifications. Currently, there are tens of millions of shipments, and there will be more in the next few years. Big growth.

However, a former senior employee of National Technology told the Caijing reporter that the company is currently leaving the market for product replacement, but the frequency of bank card replacement is low and the market size is limited.

Since Ziguang Guowei's chip products have obtained international authoritative safety certification, Ziguang Guowei is not satisfied with the local financial market. In June 2018, Ziguang Guowei and Jinbangda reached a cooperative relationship. Jinbangda is the first and fourth international financial payment solution provider in China, and has provided safe payment products and services to more than 1,000 large and medium-sized financial institutions at home and abroad.

Some people have analyzed that Ziguang Guowei has the support of Linxens in technology, market and users, and there is a new imagination in the expansion of overseas markets.

Caijing reporter was informed that Linxens remained independent after being acquired.

In the chip industry, patent barriers are thick. In order to seize the commanding heights of technology, global semiconductor companies frequently increase their competitiveness through mergers and acquisitions. For example, global semiconductor M&A transactions reached US$100 billion in 2015 and 2016. Although the Ziguang Group was once known as a “buy, buy and buy” in Chinese companies, whether it is Ziguang or other Chinese chip companies, the volume and movement of the global chip M&A market is actually very small, for example, Wentai Technology (600745.SH) The acquisition of Anshi Group for RMB 20.149 billion is the largest acquisition in China's semiconductor industry.

As countries continue to strengthen the supervision of semiconductor industry mergers and acquisitions, coupled with the upgrade of global trade friction, the possibility of large-scale cross-border mergers and acquisitions in the semiconductor industry will be less and less, and the scale will be smaller. The International Semiconductor Industry Association predicts that in the next decade, the semiconductor industry is likely to move from horizontal integration to vertical integration in the upstream and downstream, horizontally and vertically, and the “stronger and stronger” oligarchy will intensify.