Weekly Electronics News From R&A(2023/1/6)

Catalog

1.?FIT acquires PRETTL SWH group with 186 million euros

2.?Sony and Honda jointly launch Afeela electric car brand

3.?Nexperia calls US lawyer team to fight the UK’s ban

4.?Volvo?cars global sales dropped 12% in 2022, but the share of fully electric cars increased to 10.9%

5.?Infineon is prepared to spend billions of euros to find suitable acquisition targets

01.FIT acquires PRETTL SWH group with 186 million euros

FIT (Foxconn Interconnect Technology) Hon Teng, a subsidiary of Foxconn (Hon Hai Technology Group), the world's largest electronics manufacturer, recently announced that they plug into 186 million euros to acquire SWH Group, a German automotive company. The acquisition is estimated to accomplished by the second quarter of 2023, Taiwan Media United News reported. After the takeover SWH Group, the annual revenue of FIT will be up to about 350 million euros or 400 million euros. In addition, it horizontally expands key Electric Vehicle (EV) Components' Strength.

This is FIT initial merger and acquisition in 2023 as well as first international acquisition among all Taiwan technological enterprises.

PRETTL SWH Group focus on niche market as FIT expected, which coincides with the competitive strategy of FIT to lock in high gross profit and high-precision manufacturing in the information and communications technology all along. Different from the traditional construction to specification of automotive components manufacturer, PRETTL SWH Group has a good capability of automotive components design, building a long-term and strong cooperation relationships with its customers and gaining sufficient orders. Noticeably, in recent years, PRETTL SWH Group shows a stable financial performance as its operating profit is growing year by year. In the short term, it can bring significant annual revenue growth to FIT. In the future, better product mix is needed to improve the overall gross profit of FIT. It is reported that PRETTL SWH has layout in the automotive market for more than 10 years. The company works on the development and manufacturing of high-level automotive sensor wiring harness and connectors, and automotive power solutions, with customers throughout the traditional vehicle and new electric vehicle, and cooperating with the world's large automotive first and second tier suppliers.

Comment: PRETTL SWH embraces technology segments SENSE, CONNECT and ELECTRIFY which provide technological support for Data Connection, Human to machine and Power Connection of Electric Vehicle products at FIT.

02. Sony and Honda jointly launch Afeela electric car brand

Consumer Electronic Show 2023 (CES 2023) has kicked off in Las Vegas and on the first day of the massive event, Sony Honda Mobility has unveiled a new ‘Afeela’ electric vehicle prototype. The company aims to develop the production model based on this prototype, and plans to start taking pre-orders in the first half of 2025, and deliver the first cars to customers in North America in spring 2026.

The Afeela prototype also caught the media's attention among the all new products and designs in the fair, including a 97-inch TV wireless display screen, a food delivery robot with a service range of 6.4 kilometers, and a baby carriage that can drive itself .

Yasuhide Mizuno, CEO of SONY Honda Mobility, said at CES that the Afeela would ultimately be an unparalleled electric vehicle that would take full advantage of technologies in artificial intelligence, entertainment, virtual reality and augmented reality, as the firm will collaborate with a number of companies to develop the new electric vehicle. According to previous statement, Honda will emphasize drivability, manufacturing technology and after-sales service, while SONY will develop entertainment, Internet and mobile services for the electric car.

Qualcomm is expected to provide Afeela with mobile platforms such as Snapdragon digital chassis and Epic Games with technologies such as Unreal Engine 5 in order to deliver a top-notch entertainment experience.

Comment: Sony and Honda have formed a 50-50 joint venture, Sony Honda Mobility, to sell electric vehicles and provide mobility services. Mizuno unveiled that the vehicle is planed to run into mass production, with pre-orders expected to begin in the first half of 2025,with sales beginning by the end of that year and first deliveries to North American customers in spring 2026.

03.Nexperia calls US lawyer team to fight the UK’s ban

Toshiba?Nexperia in Wingtech has engaged US law firm Akin Gump to fight the UK’s ban on their purchase of the Newport Wafer Fab (NWF).

The Newport Wafer Fab, located in Newport, South Wales, UK, is Britain’s largest chip factory. It is the world’s first integrated silicon and compound on silicon wafer fab, and Wholly owned by Neptune 6 Limited.

In July 2021, Wingtech Technology announced that its wholly-owned subsidiary Nexperia had signed an acquisition agreement with N6L. After the transaction is completed, Nexperia will hold all the shares of N6L and all the rights and interests of NWF indirectly.

Nexperia is a large IDM company with complete chip design, manufacturing, packaging and testing. It was formerly a business unit of NXP Semiconductors in the Netherlands. It was spun off from NXP Semiconductors in 2016, and was acquired by Wingtech Technology three years later and became wholly owned in the following year. This year, the department for Business, Energy and Industrial Strategy (BEIS) in the UK issued a decree stipulating that Nexperia must sell at least 86% of its shares in NWF on the grounds of national security. The NWF considered that the behavior was unreasonable.

It is reported that Akin Gump will represent Nexperia in the application for judicial review of the British government's decision to block the transaction, and has also hired barrister Lord Pannick KC to advance its application.

Comment: Newport Wafer Fab originated from INMOS, a semiconductor factory established in 1982. In the 1980s, NWF supplied 60% of the global RAM storage as its most glorious moment. Later, it was acquired by various integrated circuit manufacturers in United States, Italy, Japan, Germany in succession. In 2017, Drew Nelson, the boss of IQE, took over and restructured operations of NWF following industries changing and business reconstruction at NWF. However, NWF after IQE’s acquisition could not run normally in the absence of orders and research and development funds. In May 2021, Nexperia and Drew Nelson reached an agreement to purchase the remaining 86% of the shares, which were signed in July and closed in August. Immediately after the deal, Nexperia liquidated its debt. The company started to invest an additional ￡80m to achieve the equipment replacement, orders increase, employment and capacity expansion as well as a planned 160 million pounds investment, restoring its operation.?

04. Volvo?cars global sales dropped 12% in 2022, but the share of fully electric cars increased to 10.9%

On January 5th, Volvo Cars reported sales of 615,121 cars for the full year 2022, down 12.0% compared to 2021. The share of fully electric Volvo cars reached 10.9% during the year, compared with 3.7% the previous year.

Volvo Cars’ full-year sales performance was affected by challenges across the supply chain, as well as production restraints caused by component shortages and Covid-related lockdowns in China. Despite this, demand for Volvo cars remained robust.

In the month of December, Volvo Cars sold 72,663 cars, up 12.8% compared with the same month the previous year. The share of overall Recharge cars, with pure electric and plug-in hybrid powertrains, reached 43.8% during December 2022. Fully electric cars accounted for 20.1% of global sales during December.

For regions: in the United States, the company sold 102,038 cars last year, a decrease of 16.5% compared to 2021. In December, Volvo Cars sold 11,111 cars in the US, up 6.4% compared to the same month the previous year. Sales in China amounted to 162,322 cars, down 5.4% compared to 2021. During December, Volvo Cars sold 16,950 cars in China, up 15.8% compared to the same month the previous year. In Europe, year-to-date sales decreased by 15.7% to 247,413 cars. In December, Volvo Cars sold 33,407 cars in Europe, up 17% compared to the same month the previous year.

For models: XC60 II continues to be the best-selling model for the company in 2022, as the company sold 195,338 cars during the year. The XC40 II follows in second with total sales of 169,206 cars, while the XC90 II is the third-best-selling model with 97,130 cars.?

Comment: Volvo?has taken 100% ownership of its autonomous driving (AD) software development subsidiary, Zenseact. Immediately prior to the transaction, Volvo Cars owned 86.5% in the firm and has now acquired the remaining stake of 13.5% from ECARX, a global mobility tech company.

05.Infineon is prepared to spend billions of euros to find suitable acquisition targets

In an interview with Nikkei, Jochen Hanebeck, CEO of Infineon, Germany, said that "complete self-sufficiency is absolutely impossible to achieve" due to the fact that many countries are increasing semiconductor investment in their own countries and friendly regions. Non-cutting-edge products such as automotive semiconductors and power semiconductors for electrical control continue to be in short supply, which is mainly related to the fact that foundry companies have not actively increased the production capacity of non-cutting-edge products.

Therefore, Hanebeck also expressed the idea of launching large-scale investment.

According to Reuters, German chipmaker Infineon CEO Jochen Hanebeck said in an interview that the company is prepared to spend billions of euros to find suitable acquisition targets. The German chip maker is constantly "on the lookout" for suitable companies.

Hanebeck told Frankfurter Allgemeine Zeitung (FAZ). "I see it in the range of up to a few billion (euros)." The chipmaker has said that it sees growth in particular in electromobility, autonomous driving, renewable energy, data centres, and the so-called internet of things - in which items like appliances, factory equipment and health monitors are connected to the internet or other communications networks.

In the fiscal year ending September 2022, Infineon’s revenue increased by nearly 30% to 14.2 billion euros (approximately 105.222 billion yuan), and departmental profits increased by 63% to 3.4 billion euros (approximately 25.194 billion yuan). It is quite conceivable that start-ups that are not sufficiently well financed, for example, would want to join a corporation, Hanebeck told FAZ.

The CEO would not comment on individual takeover candidates, according to FAZ. He said the company could expand its portfolio in several fields, including power semiconductors, sensors, software and artificial intelligence.

Comment: The market believes that although Infineon enjoys a high reputation among investors, the current market situation casts a shadow over the environment for transactions and (acquisition) financing. Rising debt costs have made banks more cautious than ever about the risks of M&A deals in this volatile environment.

It is reported that Infineon's last major acquisition was more than three years ago, when it acquired its competitor Cypress Semiconductor, with a transaction value of 9 billion euros. It is the largest merger and acquisition transaction in the company's history so far.

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