Group 1 - The company hosted a research meeting on May 21, 2025, with 20 institutions including Bosera Fund and Changxin Fund [1] - The company’s top five customers' share has decreased from 44.12% in 2022 to 32.98% in 2024, indicating a trend towards a more balanced and diversified customer structure [2] - The company was recognized as one of the first "chain leader" enterprises in the Lingang New Area, highlighting its role in driving industry chain development [3] Group 2 - The company plans to complete its headquarters R&D building by Q4 2025, which will accommodate 2,000 employees [3] - The company aims to enhance its technological innovation capabilities by focusing on DTCO and collaborating with industry partners to develop application-driven EDA solutions [3] - On April 29, 2025, the company’s board approved a proposal to seek shareholder authorization for a simplified procedure to issue up to 300 million RMB in stock, not exceeding 20% of the latest net assets [4][5]

Core Viewpoint - The report outlines the continuous supervision and compliance of Shanghai Gaolun Electronics Co., Ltd. by the sponsor institution, emphasizing the company's adherence to regulations and the effectiveness of its internal controls and governance structures [1][2][3]. Continuous Supervision Work - The sponsor institution has established a comprehensive and effective continuous supervision system, including a work plan tailored to specific supervisory tasks [1]. - A continuous supervision agreement has been signed with Gaolun Electronics, detailing the rights and obligations of both parties during the supervision period [1]. - The sponsor institution conducts regular communication, site inspections, and due diligence to monitor the business situation of Gaolun Electronics [2]. Compliance and Governance - The sponsor institution ensures that Gaolun Electronics and its management comply with laws, regulations, and commitments made [2]. - The company has been urged to establish and effectively implement internal control systems, including financial management and auditing processes [2]. - The sponsor institution has reviewed the company's information disclosure documents and confirmed their accuracy and completeness [3][5]. Financial Performance - In 2024, Gaolun Electronics reported a revenue of approximately 419 million yuan, a 27.42% increase from 2023 [16]. - The net profit attributable to shareholders was approximately -96 million yuan, indicating a loss compared to the previous year [16]. - The company's cash flow from operating activities was negative, reflecting a significant decline from the previous year [16]. Research and Development - The company invested approximately 28.87 million yuan in R&D in 2024, with R&D expenses accounting for 68.90% of revenue, a decrease of 3.15 percentage points from the previous year [17]. - Continuous R&D investment is crucial for maintaining competitive advantages in the EDA industry, with a focus on core technologies and product innovation [17]. Market Position and Competition - The EDA market is characterized by a high concentration of major players, with Gaolun Electronics facing significant competition from established firms [6][10]. - The company aims to enhance its market position through strategic acquisitions and investments, although it faces challenges in identifying suitable targets [11][12]. Risks and Challenges - The company faces various risks, including increased R&D costs, potential technology obsolescence, and challenges in achieving market recognition for new products [6][7][8]. - The limited scale of the EDA market and the company's relatively small size may hinder its growth and competitive capabilities [10]. Corporate Governance - The company has no controlling shareholder, and its equity is relatively dispersed among shareholders, with no reported pledges or freezes of shares [20].

Core Viewpoint - The acquisition of Ruicheng Chip Micro by Gaon Electronics signifies a strategic shift in China's EDA industry from "tool-based" to "platform-based" integration, reflecting the evolving landscape of the semiconductor sector in response to domestic and international pressures for self-sufficiency and innovation [1][5][10]. Group 1: Acquisition Details - Gaon Electronics plans to acquire 100% of Ruicheng Chip Micro and 45.64% of Naneng Micro through a combination of share issuance and cash payment, making both companies wholly-owned subsidiaries [1]. - The acquisition is seen as a critical step in addressing the structural gap in the domestic EDA ecosystem, particularly in the IP authorization segment, which has been a weakness for Chinese EDA players [3][5]. Group 2: Market Context - The global semiconductor IP market reached $7.04 billion in 2023 and is projected to grow to $15.68 billion by 2032, with a compound annual growth rate of 9.31% from 2024 to 2032 [4]. - The EDA industry is characterized by high market concentration, with major players like Synopsys, Cadence, and Siemens EDA controlling over 90% of the market [8]. Group 3: Financial Implications - Ruicheng Chip Micro is expected to generate approximately 357 million yuan in revenue in 2024, with over 166 million yuan coming from its core IP authorization business, and a net profit exceeding 34 million yuan [5]. - Gaon Electronics reported a revenue of 420 million yuan for 2024 but faced a net loss of 95 million yuan, primarily due to high R&D investments and a small revenue base [5]. Group 4: Strategic Evolution - Gaon Electronics is adopting a unique EDA evolution path characterized by a Design-Technology Co-Optimization (DTCO) framework, which integrates EDA tool design with wafer manufacturing processes [7][8]. - The acquisition of Ruicheng Chip Micro allows Gaon to establish a complete closed-loop system encompassing process, design, manufacturing, and verification, marking a significant milestone in the Chinese EDA landscape [8][10]. Group 5: Industry Collaboration - The acquisition reflects a broader trend of consolidation within the Chinese EDA industry, where companies are increasingly collaborating to build a cohesive ecosystem, akin to the historical development seen in the global EDA market [8][10]. - The transaction is viewed as a "win-win" for all stakeholders involved, enhancing Gaon's core capabilities, providing an exit strategy for Ruicheng, and serving as a model for future industry integration efforts [10]. Group 6: Future Outlook - The next decade for China's EDA industry is expected to focus on building a complete ecosystem that integrates EDA tools, IP authorization, and system delivery, moving from a phase of tool development to a more comprehensive platform approach [12]. - The strategic value of the acquisition extends beyond financial metrics, positioning Gaon Electronics as a foundational infrastructure provider for the semiconductor design industry in China [10][12].