On May 14th, Taiwan's Fore Electronics, a subsidiary of the global testing leader Sun Yat sen, announced that it will publicly acquire common shares of Yuanlong Electronics at a price of NT $9 per share. The maximum number of shares to be acquired is 15100, and the total acquisition amount will reach NT $136 million. Based on yesterday's Yuanlong closing price of NT $8.73, the premium is about 3.09%.

The announcement states that during the acquisition period from May 15th to June 24th, the purpose of the acquisition is to rectify the operation of Yuanlong Electronics, promote the company's business transformation, and maintain the equity of Yuanlong Electronics and other shareholders. The acquisition price per share is NT $9, and the maximum number of shares planned to be acquired is 15100. It is expected to acquire up to 12.4% of Yuanlong's total issued shares. After the completion of this acquisition, Sun Moon Investment Holdings will hold 68.18% of Yuanlong's shares.

Yuanlong is facing delisting due to nine consecutive quarters of losses in the 6-inch power semiconductor market disadvantage. The industry speculates that after the acquisition, Yuanlong may undergo privatization and reorganization to embrace AI business opportunities. The acquisition by Riyueguang aims to help Yuanlong rectify its operations, promote business transformation, and avoid its exit from the market due to financial crisis by integrating resources.

Yuanlong's first quarter financial report this year showed a consolidated revenue of 268 million yuan, a quarterly increase of 14.2%, and an annual increase of 24.6%. Due to negative gross profit margin and operating profit margin, Yuanlong's net loss after tax in the first quarter of this year was 128 million yuan, setting a new quarterly high in nearly four years. The net loss per share was 1.06 yuan, and as of the end of the first quarter of this year, the net value per share was -0.42 yuan, which turned negative compared to 0.62 yuan at the end of last year. According to regulations, Yuanlong will face the fate of delisting.

It is reported that Yuanlong has long been focusing on the power semiconductor 6-inch wafer foundry market. Due to the fierce competition from Chinese manufacturers in the MOSFET market in recent years, power semiconductor chip factories have begun to move towards high-voltage technology, even investing in the research and development of third class semiconductors such as silicon carbide (SiC) or gallium nitride (GaN). In addition, IDM giants have directly integrated logic ICs into power semiconductors to launch new products, and cooperated with large wafer foundries to outsource wafer production. Faced with numerous challenges, Yuanlong's specialized 6-inch power semiconductor wafer foundry has begun to fall into a market disadvantage, becoming the last straw that crushes Yuanlong.

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