The "underwear factory" transformed into a semiconductor and became the third in the world
Master Core
2024-04-08 11:00Posted on the official account of Guangdong Core Master
But what few people know is that the matter of "cross-border core making" actually existed as early as the seventies of the last century. In 1972, a small upsurge in the establishment of transistor factories in various parts of the mainland was set off, and the "Yangtze River Underwear Factory" in Jiangyin, Jiangsu Province, responded to the call, transformed and changed its name to "Jiangyin Transistor Factory", and resolutely embarked on a difficult cross-border journey.
Source: Changdian Technology's official website
It is the later famous Changdian Technology. In 2023, with a market share of 10.27%, Changdian Technology will rank third in the world and first in Chinese mainland in the chip packaging and testing industry, becoming one of the few semiconductor players in mainland China who can compete strongly in the international arena. The process of its cross-border rise can be said to be a representative sample of China's semiconductor breakthrough.
01
The counterattack life of the "mason": he was ordered to come back to life in danger
The Jiangyin transistor factory, which has just been transformed, has also been "brilliant" for a short time.
On April 8, 1984, China successfully launched its first synchronous communications satellite, Dongfanghong 2, becoming the fifth country in the world to independently develop and launch a communications satellite. Jiangyin Transistor Factory has also received congratulatory telegrams and commendations from the Central Committee of the Communist Party of China, the State Council and the Central Military Commission for its contribution to the product.
However, with the deepening of reform and opening up, a large number of semiconductor foreign-funded enterprises have poured into the domestic market, bringing overseas advanced technologies and products, but also having a huge impact on the growing local transistor factories. The Jiangyin Transistor Factory was one of them, which gradually reduced to supporting production and came to the verge of bankruptcy in 1988.
At this critical juncture, 32-year-old Wang Xinchao was ordered to transfer from the No. 1 Weaving Factory to Jiangyin Transistor Factory as the branch secretary and deputy director. At this time, he may not have thought that he would later become the soul of Changdian Technology for more than 30 years of ups and downs, and personally created a generation of industrial giants.
Source: New Wave Venture Capital official website
Born in Jiangyin, Jiangsu Province in 1956, Wang Xinchao was not qualified to go to high school, so he worked as a mason for two years after finishing junior high school. In 1972, at the age of 17, he was assigned to Jiangyin No. 1 Weaving Factory and became a mechanic. After that, he worked from mechanic to trade union officer, and all the way to the secretary of the No. 1 weaving factory in Jiangyin.
On December 30, 1988, Wang Xinchao, then deputy secretary and deputy director of Jiangyin No. 1 Weaving Factory, came to Jiangyin Transistor Factory after being appointed by his superiors, starting 33 years with Changdian Technology.
As soon as he took office, Wang Xinchao carried out a quality-centered economic responsibility system, and in just over a year, the yield rate increased from 50% to 70%, and the integrated circuit automatic production line was successfully put into production. As a result, the operating conditions of Jiangyin Transistor Factory have been improving day by day.
In the autumn of 1990, 34-year-old Wang Xinchao was promoted to the fifth director of the transistor factory, and officially took over the hot potato with a cumulative loss of 2.18 million yuan, insolvency, and only one customer. In order to make Jiangyin Transistor Factory truly "come back to life", Wang Xinchao decided to develop a new product - LED semiconductor indicator.
Source: New Wave Venture Capital official website
Since the factory has been unsuccessful in developing new products many times before, it is difficult to bear the risk of development failure. In order to raise enough R&D funds, Wang Xinchao borrowed 50,000 yuan under great pressure and made the first successfully developed new product of Jiangyin Transistor Factory.
In addition, he took matters into his own hands, mobilizing his employees to ride their bicycles with him and go to the streets to do sales. From 1991 to 1993, the new LED semiconductor indicator has accounted for one-third of the factory's sales, and Jiangyin Transistor Factory has also successfully turned losses into profits, and in 1992, it was renamed Jiangyin Changjiang Electronics Industrial Company.
02
The "listed hero" discrete device business has become the top five in the world
In the development process of JCET, the discrete device business can be said to be an important "hero", which not only involves the old bank - discrete device packaging and testing business, but also involves the manufacturing and sales of discrete devices. The LED semiconductor indicator mentioned above is one of the representative products.
Although the LED semiconductor indicator has successfully attracted customers, the factory's debt ratio and break-even point are basically above 90%, and the scale is small, lack of development funds and unique technical advantages, in the face of a large number of overseas electronic components smuggled into the domestic market at that time, Changdian's products are difficult to open the development gap.
The outbreak of the Asian financial crisis in 1997 affected the entire semiconductor industry. Wang Xinchao also decided to "save the country with a curve", vigorously develop the discrete device packaging and testing business, and find a new way out for the factory. He found a joint venture financial leasing company in Beijing and invested more than 8 million US dollars in three phases, expanding the scale of the factory by 4.5 times, and the output of discrete devices in the factory increased from 300 million to 1.35 billion per year, forming a scale advantage.
In 1998, the state vigorously rectified the crime of smuggling, so that a large area of electronic components was vacated in the domestic market. With the advantages of "large-scale, high-quality, low-cost and high-efficiency", JCET quickly occupied the vacated market and became the largest discrete device packaging and testing enterprise in mainland China.
Relying on the victory of discrete devices, the company completed the shareholding reform in 2000 and officially changed its name to "Jiangsu Changdian Technology Co., Ltd." In 2003, JCET was listed on the Shanghai Stock Exchange, becoming the first listed semiconductor packaging and testing company in mainland China, and Xinchao Group became the de facto controller of JCET.
Source: New Wave Venture Capital official website
In addition to the discrete device packaging and testing business, JCET was also the largest discrete device manufacturer in mainland China at that time, with its annual output accounting for 50% of the national market.
In 2004, the National Development and Reform Commission issued a document to encourage the "SMD" manufacturing of electronic components, and Wang Xinchao decisively invested 600 million yuan to transform the mainstream "in-line" component production line in the market at that time. In 2005, the proportion of its new chip components in production and sales was as high as 68%, an increase of 19 percentage points year-on-year, and the net profit was 54.8602 million, an increase of 12.37% year-on-year, and the profitability was significantly improved.
In 2006, JCET successfully acquired a 75% stake in Xinshunwei, a discrete device wafer manufacturer, hoping to build brand influence by integrating manufacturing and packaging businesses. In October 2007, JCET held a promotion meeting and became the first company in mainland China to supply a full set of discrete device solutions for mobile phones. By 2008, JCET's discrete device business scale had reached the top five in the global market and the first in China.
In the same year, affected by the U.S. financial crisis, the global market was hit hard, and JCET also suffered a precipitous decline in net profit. In the face of new challenges, Wang Xinchao decided to refocus on the "old main business" packaging and testing, increase investment in innovation and technology upgrading, but the discrete device business still contributed a lot of shares to the company's revenue.
In 2018, JCET announced that it would further optimize resource allocation, focus on semiconductor packaging and testing business, and divest assets related to the self-sales business of discrete devices, including Xinshunwei, Shenzhen Changdian (later changed to Shenzhen Changjing) and Xinshenhongda. At this point, its "listing hero" discrete device business has also officially withdrawn from the historical stage.
03
Buy and buy all the way, and do the third in the global packaging and testing
As a technology, capital and talent-intensive industry, the semiconductor industry has frequent mergers and acquisitions, and packaging and testing leaders such as ASE Group, Tongfu Microelectronics, and Huatian Technology have achieved resource integration and market expansion through mergers and acquisitions. The same is true of Changdian Technology, whose growth path of packaging and testing business is still talked about by the industry, and is nicknamed "buying and buying all the way" to the third place in the global packaging and testing.
In 2003, Wang Xinchao accidentally learned that APS, a Singapore-based chip packaging research and development institution, was looking for a partner in China. However, APS's copper pillar bump packaging technology is relatively bold, because it has not yet been piloted, and it is not a mature technology in the industry at that time, there are not many interested companies.
However, Wang Xinchao thought that this was a good direction, so he established Jiangyin Changdian as a joint venture with APS, obtained APS's Bumping (bumping) packaging patents, and successively introduced FC (flip chip) research equipment and bump patents. This is the earliest enterprise engaged in wafer-level advanced packaging in mainland China, and its wafer bump and wafer-level chip-scale packaging technology has opened a precedent for China's semiconductor advanced packaging technology.
Source: Changdian Technology's official website
Since then, on the basis of introduction, digestion and absorption, JCET has carried out the second independent development of Bumping technology, developed the front-end process bump processing business for bare die packaging, and established the first world-class wafer-level packaging production line in mainland China. At the same time, it has independently researched and applied for hundreds of new technologies and patents, including China's first new packaging technology - FBP planar bump packaging.
At the beginning of 2009, due to the impact of the international financial crisis, APS's operation became more difficult. In April, JCET announced the acquisition of 51% of the shares of Singapore JCI for 16.5 million yuan, indirectly holding shares in Singapore APS, and owning a number of advanced packaging patent technologies, including global patents for copper pillar bumps. This proved to be a wise choice, and the technology was later authorized to 11 of the world's leading packaging and testing factories, including Amkor and Sipin.
In that year, with an annual revenue of 342 million US dollars, JCET surpassed Jingyuan Electronics and Unisem Corporation, and the market size increased from the eleventh place in 2008 to the eighth place, successfully entering the top ten ranks of the global semiconductor packaging and testing industry for the first time, which is also the first time that mainland packaging and testing companies occupy a place in the global market.
Source: Changdian Technology announcement
2014 is a milestone for JCET.
At that time, the world's fourth-largest packaging and testing factory, Xingke Jinpeng, was losing money for two consecutive years, and its controlling shareholder (Temasek) sought to exit. Xingke Jinpeng has advanced packaging technologies such as SiP and Fan out, as well as many well-known customers such as Qualcomm, Broadcom, Intel, Marvell, ADI, MTK, etc., which are very complementary to JCET in terms of technology and customers (rumored to be as high as 95%). Therefore, Changdian Technology, which ranks sixth in the world, decided to "swallow the elephant" and staged a shocking merger and acquisition.
After several rounds of painstaking negotiations, JCET and Temasek finally reached an agreement to acquire Xingke Jinpeng at an offer of US$780 million. However, at that time, JCET's annual revenue was only US$982 million, and its debt ratio was as high as 68%, and its own financial situation could not support the acquisition, and the company's equity was relatively dispersed, so it was difficult to raise 4.5 billion yuan, and the non-public offering would bring the risk of equity dilution. This sky-high acquisition was in a dilemma for a while.
In 2015, things took a major turn. Under SMIC's matchmaking, JCET introduced two financial investors, the newly established "Big Fund" and SMIC's Chippower Semiconductor, and successfully completed the acquisition of Xingke Jinpeng for 4.78 billion yuan (equivalent to 780 million US dollars) through the establishment of a three-level structure of "Changdian Xinke-Changdian Xinpeng-Singapore JCET Company". Among them, Changdian Technology only invested 1.52 billion yuan and left 2.351 billion yuan of goodwill.
Source: Investor Daily
This case-level "snake swallowing elephant" acquisition is also a major attempt by the mainland semiconductor industry in the process of seeking international industry integration. After the merger, JCET jumped from sixth to fourth in the world (and then to third a year later), and more importantly, the acquisition enabled JCET to obtain the world's most advanced packaging technologies such as FCPOP, FO-WLP and chip-level SiP, and entered the supply chain of top international customers.
Since then, JCET's "buy, buy, buy" strategy has continued. In July 2018, JCET and ADI signed a strategic cooperation memorandum in the U.S. for the acquisition of ADI's Singapore facility and the provision of test lines for ADI, and in June 2021, the handover of the facility was officially completed.
On March 4, 2024, JCET announced that it plans to acquire 80% of the equity of Shengdi Semiconductor, a wholly-owned subsidiary of Western Digital, for US$624 million (about 4.5 billion yuan). JCET said, "After the completion of this transaction, the company will expand its market share in the field of storage and computing electronics and form a differentiated competitive advantage. ”
It can be seen that the growth of Changdian Technology is closely related to frequent mergers and acquisitions, and it has achieved scale expansion through mergers and acquisitions, ranking among the top three in the industry for many years. As of 2023, Changdian Technology ranks third in the world and first in Chinese mainland in the chip packaging and testing industry with a market share of 10.27%.
图源：ChipInsights
04
The tide rises and falls, ushering in a new chapter
From the perspective of capital market and corporate governance, in the past 30 years, Changdian Technology's shareholding structure and actual controller have undergone multiple rounds of changes, and a key node is its acquisition of Xingke Jinpeng.
In June 2017, the major asset restructuring of Changdian Technology was completed, and the largest shareholder was changed from Xinchao Group to Xindian Semiconductor, which held 14.28% of the company's equity and was the company's largest shareholder, with Xinchao Group holding 13.99% of the shares and Da Fund holding 9.54% of the shares. Due to the relatively close equity ratio of the three major shareholders, JCET changed to no controlling shareholder and no actual controller.
During the period from 2017 to 2018, with the three private placements carried out by Changdian Technology, the big fund rose to the largest shareholder, and the core semiconductor became the second largest shareholder, while Wang Xinchao's Xinchao Group was also gradually reducing its holdings. Since then, according to Changdian Technology's financial report for the first quarter of 2021, Wang Xinchao is no longer among the top ten shareholders.
On September 25, 2018, JCET announced that Wang Xinchao resigned as CEO of JCET and will no longer serve as chairman of the board from April 2019. In March 2021, Wang Xinchao submitted his resignation report to the board of directors of JCET, resigning as the honorary chairman of the company. At this point, Wang Xinchao, who is at the helm, officially withdrew, and the "Wang Xinchao era" of Changdian Technology has come to a complete end.
Source: New Wave Venture Capital official website
On March 27, 2024, JCET announced that its top two shareholders, Big Fund and Chippower Semiconductor, have signed a share transfer agreement with Panshi Hong Kong, both of which will transfer a total of 22.54% of the company's shares to Panshi Hong Kong or its affiliates at a price of 29 yuan per share, with a total amount of 11.691 billion yuan.
According to the announcement, if the equity transfer is successfully completed, the big fund will retain about 3.5% of the shares of JCET, while Xindian Semiconductor will completely withdraw. In addition, after the parties complete the delivery of JCET's shares and the reorganization of the board of directors of JCET in accordance with the Share Transfer Agreement, the controlling shareholder of JCET will be changed to Panshi Hong Kong or its affiliates, and the actual controller will be changed to China Resources.
Source: Changdian Technology announcement
The announcement also pointed out that the equity transfer still needs to be re-examined by the board of directors of China Resources Group and reviewed by relevant regulatory authorities, so there is still uncertainty about whether it can be successfully completed.
But if everything goes well, the entry of China Resources Group will end the state of Changdian Technology without an actual controller for several years, and it also means that Changdian Technology may usher in a new "China Resources era".
Resources:
1. The establishment and development of Xinchao Group;
2. Core Journey|China's chip packaging and testing, to be the third in the world;36 Krypton
3. Key figures|Wang Xinchao, founder of JCET, Ruilan Capital
4. Throwing 4.5 billion yuan! This company has become the third in the world by buying, buying, buying, buying, buy
5. From an underwear factory to a 60 billion packaging and testing leader, the long march of a Chinese chip company;
6. The "Perfect Marriage" of Technology as Media;
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The "underwear factory" transformed into a semiconductor and became the third in the world -
The "underwear factory" transformed into a semiconductor and became the third in the world -
The "underwear factory" transformed into a semiconductor and became the third in the world -
The "underwear factory" transformed into a semiconductor and became the third in the world -
The "underwear factory" transformed into a semiconductor and became the third in the world -
The "underwear factory" transformed into a semiconductor and became the third in the world -
The "underwear factory" transformed into a semiconductor and became the third in the world -
The "underwear factory" transformed into a semiconductor and became the third in the world -
The "underwear factory" transformed into a semiconductor and became the third in the world -
The "underwear factory" transformed into a semiconductor and became the third in the world