Huacan Optoelectronics recently made headlines with its first official announcement regarding an asset restructuring plan. The primary focus of this reorganization is Harmony Corelight (Yiwu) Optoelectronics Technology Co., Ltd., which acquired 100% of the shares of American New Semiconductor Co., Ltd. This strategic move marks Huacan's entry into the Internet of Things (IoT) sector, signaling a significant shift from its traditional LED chip business.
According to a research analyst from an industry brokerage firm, speaking to the 21st Century Business Herald, this acquisition enables Huacan Optoelectronics to enter the core of the IoT market and the foundational MEMS sensor industry. The company now aims to develop both its previous LED chip business and the new MEMS sensor segment in a synergistic manner, leveraging their combined strengths for future growth.
Forrester Research predicts that by 2020, the IoT industry will be 30 times larger than the information internet. In addition to Huacan, many other companies are also expanding into the IoT space, such as Sambo Technology. A report from Guoxin Securities highlights that with the rise of the IoT era, the demand for sensors is increasing rapidly. In 2011, the global sensor market was valued at $82.8 billion, and it is expected to reach $158.7 billion by 2015—nearly doubling in just four years.
Huacan Optoelectronics has taken a major step forward by acquiring U.S.-based semiconductor company Meixin. On July 21, the company, primarily known for its LED chip manufacturing, announced a preliminary restructuring plan involving the issuance of shares to acquire assets. Specifically, it plans to purchase 100% of the equity of Meixin through a special purpose vehicle (SPV). The transaction price is based on a price-to-earnings ratio of 15 to 20 times the company’s 2017 forecasted net profit, with the final valuation determined by an independent appraisal.
Meixin, originally spun off from Analog Devices' MEMS division in 1999, is the only publicly listed company specializing in pure MEMS products. It focuses on developing and producing sensor solutions, including acceleration, vibration, geomagnetic guidance, current, flow, and temperature measurement systems.
A brokerage analyst told the 21st Century Business Herald that Huacan’s cross-border M&A will not only boost China’s semiconductor market but also drive the development and application of MEMS sensors under the growing IoT trend. Zhao Yang, Chairman of the company, emphasized that the goal is to enhance the development of the MEMS sensor industry. He noted that sensor products play a vital role in integrating humans, nature, and machines. Meixin, one of the few companies relying solely on MEMS sensors for profitability, offers valuable technologies that can benefit from Huacan’s platform.
Zhao Yang further explained that the company has been focusing on the development of MEMS and microelectronics monolithic integration technology (MEMS SOC) for 17 years. It holds leading patents in wafer-level packaging and is the only company achieving mass production using these technologies. “Our next step is to develop 6-axis and 9-axis monolithic integrated products,†he said.
Teng Yong, a deputy director at LEK and a key figure in the industrial products sector, highlighted that Meixin’s thermal accelerometers and anisotropic geomagnetism offer advantages in sensitivity, impact resistance, and stability. Additionally, the decline in average prices for MEMS inertial sensors has helped reduce production costs, positively impacting the company’s profit margins.
As the IoT continues to expand, sensors are becoming increasingly essential. The demand for sensor products has surged, with a growing emphasis on high-tech MEMS sensors. Compared to traditional mechanical sensors, MEMS sensors are lighter, cheaper, consume less power, and are easier to integrate. Analysts predict that in the mature IoT era, sensors will be embedded in various devices, from mobile terminals to smart equipment, factory machinery, and construction materials.
While companies like Huatian Technology, Jingfang Technology, Hanwei Electronics, and Huagong Technology are also entering the field, most domestic firms are still in the R&D or small-scale production stage due to the late start in MEMS sensor development. However, the Chinese MEMS sensor market is expected to grow at a rate of around 30% in the coming years. With strong government support for IoT, the sensor industry is set for significant growth.
According to the "2016–2021 China MEMS Sensor Industry Market Demand and Investment Planning Analysis Report," the output value of China’s sensor market has surpassed 120 billion yuan. With continued IoT development, the sensor market is projected to grow by 30% annually over the next five years. The market is shifting toward MEMS sensors, which are expected to become the dominant force in the industry.
Teng Yong believes that consumer electronics and automotive electronics are the main drivers of MEMS sensor demand. As China is the world’s largest producer of mobile phones and auto market, it presents significant opportunities for domestic sensor companies. While 80% of global smartphones are made in China, and the country remains the largest auto market, the integration of sensors into these sectors is growing rapidly.
However, Teng pointed out that many domestic automakers still rely on imported sensor technologies. Zhao Yang acknowledged that while Meixin has developed patented MEMS sensor technology and achieved mass production, its products are currently sold to foreign companies before being resold in the domestic market. Despite this, the growing demand for sensors in China provides promising prospects for future expansion.
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