Heshun Petroleum Plans to Acquire a 54% Stake in Kuixin Technology for 540 Million Yuan to Seize Opportunities for Domestic Substitution in the Semiconductor IP Industry

On the evening of March 18, Heshun Petroleum (603353) announced that it will acquire control of Shanghai KuiXin Integrated Circuit Design Co., Ltd. (hereinafter referred to as “KuiXin Technology”) through equity acquisition and capital increase.

The announcement disclosed that during the board meeting held that day, after review and effective voting by all directors present, the transaction proposal was unanimously approved. Heshun Petroleum stated that, in accordance with the company’s strategic planning and operational development needs, the company, its wholly owned subsidiary, and ChipMicro (Shanghai) Electronics Co., Ltd. (hereinafter referred to as “HeXin Micro”) signed a series of contracts including the “Equity Transfer Agreement” and “Capital Increase Agreement” with KuiXin Technology and some of its shareholders and actual controllers.

According to the “Asset Valuation Report,” the market-based valuation of KuiXin Technology’s total shareholder equity is 1.355 billion yuan, with an appreciation of 1.208 billion yuan, representing an 821.07% increase.

HeXin Micro plans to acquire the equity corresponding to an investment of $92.62 million in KuiXin Technology (accounting for 35.11% of KuiXin Technology after the transaction) through a cash capital increase and equity transfer, and to exercise voting rights for 10.09% and 5.91% (a total of 16%) of KuiXin Technology held in trust by MS2Technology Limited and XCIHolding Limited, respectively. This will give a total control of 51.11% of KuiXin Technology’s voting rights, thereby gaining control of the target company. After the transaction is completed, KuiXin Technology will be included in Heshun Petroleum’s consolidated financial statements and become a controlling subsidiary of the listed company.

Qichacha data shows that KuiXin Technology was established in August 2021 with a registered capital of approximately $2.4096 million. Currently, KuiXin Technology specializes in the research and development and licensing of high-speed interface IP, providing Chiplet solutions and high-speed interconnect products, along with one-stop chip customization services. Its industry segment is the semiconductor IP industry. Semiconductor IP (Intellectual Property) refers to integrated circuit modules with specific functions that are reusable after pre-designed verification, serving as the core underlying technology in chip design.

Heshun Petroleum stated that the integrated circuit industry is one of China’s strategic industries, and the semiconductor IP sector is a crucial upstream link in the integrated circuit industry chain characterized by “asset-light, high barriers, and high margins.” It is strongly supported by national policies, with significant space for domestic substitution, and has promising growth prospects.

After careful research and discussion, Heshun Petroleum’s management believes that the semiconductor IP industry has good development prospects and considerable growth potential. KuiXin Technology’s business model is built on high-value semiconductor IP solutions. Therefore, Heshun Petroleum intends to make strategic arrangements to seize opportunities for domestic substitution in the semiconductor IP industry, seeking new growth points and promoting the company’s sustainable development.

Heshun Petroleum noted that in the field of high-speed interface IP, KuiXin Technology’s products match the performance of leading overseas companies, breaking foreign monopolies and filling domestic gaps. KuiXin Technology designs and licenses interface IP products covering PCIe, USB, LPDDR, and other protocols, compatible with TSMC, Samsung, and other domestic and international wafer fabs with process nodes from 5nm to 55nm. Its products are widely used in data centers, artificial intelligence, automotive electronics, and consumer electronics. Currently, KuiXin Technology has served over 60 clients and is one of the few domestic companies capable of providing complete Chiplet solutions. Its latest products, UCIe and Chiplet interconnect IP, are used in domestically produced high-performance chips, supporting large-scale computing clusters.

As of now, the audit and asset valuation work for KuiXin Technology has been completed. In 2024 and 2025, KuiXin Technology’s revenue is projected to be 1.59 billion yuan and 2.12 billion yuan, respectively, with net profits of -18.4888 million yuan and 20.6405 million yuan. After deducting non-recurring gains and losses, net profits are expected to be -29.8414 million yuan and 14.864 million yuan.

All parties agree that KuiXin Technology’s performance commitment period is for three full fiscal years: 2026, 2027, and 2028. During this period, the audited consolidated revenue for each year should not be less than 450 million yuan, 600 million yuan, and 750 million yuan, respectively. The combined revenue from IP and high-speed interconnect products should not be less than 210 million yuan, 235 million yuan, and 262.5 million yuan, respectively. The audited net profit attributable to the parent company’s shareholders for each year should be positive.

Heshun Petroleum has signed a “Performance Compensation Agreement” with the relevant parties. If the performance targets are not met, Chen Wanyi and others shall compensate HeXin Micro in cash.