By Gabby Chen

(JW Insights) Jun 6 -- Leading Chinese semiconductor investors gathered at the JiWei Investment and Financing Forum on June 3 to share insights and analysis on the investment landscape and explored opportunities in more design, equipment, and material markets in next wave of merger and acquisition (M&A) and seek favorable exit strategies.

Themed "Expanding Investment in the Post-Pandemic Era," the forum was part of the 7th JWSS (JiWei Semiconductor Summit) in Xiamen City of southeastern China's Fujian Province, co-organized by JW Insights - China's leading consulting agency on semiconductor and ICT industries.

Wang Yanli, a senior analyst of JW Insights, noted that "Investors have been more cautious this year, making it more challenging for startups to secure financing. This underscores the importance of adopting a rational outlook on the future."

Wang's speech revealed that the first four months of 2023 saw a total of 149 financing cases in China's semiconductor industry, a year-on-year drop of 19%. The combined financing amount for these cases amounted to RMB 21.84 billion ($3.07 billion), another significant decrease of 37.5% compared to the previous year.

Investment transactions primarily focus on IC design, semiconductor materials, and equipment. IC design leads with a share of 31% and 45 financing cases. Semiconductor materials ranked second with 21 financing cases, followed by semiconductor equipment with 17 financing cases.

Yu Lei, vice president of Xinchao Group (新潮创投), pointed out that the trend of mergers and acquisitions will prevail in China's semiconductor industry. The industry's companies have relatively smaller scales and a more fragmented market in China. However, there is immense potential for growth and expansion in the industry.

He added that M&A can enhance the competitiveness of semiconductor companies in terms of market size, cutting-edge technologies, and customer resources. M&A represents a proactive direction that semiconductor companies need to embrace, but it requires patiently waiting for suitable opportunities.

Chen Yu, executive director of Hua Capital (元禾璞华), said that the semiconductor industry is the most solid foundation in technology and presents investment opportunities in exploring niche segments.

With the sanctions against in place, it is expected that the capacity of mature processes will be expanded. She singled out more investment opportunities in the upstream supply chain of semiconductor equipment and components, particularly in the materials sector.

In addition, investors should capitalize on the emerging investment opportunities in the Chiplet ecosystem, characterized by lower domestic production capabilities and substantial potential for domestic substitution.

Xie Meng, senior investment manager at Anxin Capital (安芯投资), pointed to the unbalanced state of China's compound semiconductor industry chain, with weaknesses and delays attributed to substantial investment requirements and lengthy cycles for raw materials, equipment, and wafer manufacturing.

In response, Anxin Capital has placed its focus on addressing these weaknesses and bridging the gaps in the domestic supply chain within the compound semiconductor industry.