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By Miranda Li
China's leading IC design company Goodix Technology seeks new business growth with moves in capital operation, talents recruitment, and research input over the last couple of years after the decline of demands for its fingerprint chips, of which it was once a dominant supplier.
A recent JW Insights report tracks the background and status of the company.
Founded in 2002 and listed on the Shanghai Stock Exchange in 2016, Goodix Technology(汇顶科技) is the giant in the mobile phone fingerprint chip market, with a market value of RMB170 billion ($25.415 billion) at its peak two years ago. The company ranked 14th in JW Insights' Top 100 List of Chinese Semiconductor Companies.
The changes in the smartphone and other device market have led to a fast drop in its market value to less than RMB30 billion ($4.485 billion), with its first-quarter performance this year falling into a loss.
Goodix Technology started from the landline telephone chips business. It turned to the capacitive touch button chip market with the development of smartphones and other consumer electronics. After 2011, the rise of smartphones and tablet computers turned the company into a major supplier of capacitive touch button chips.
In 2016, more capacitive fingerprint chips were used in a smartphone, becoming mainstream in the market in the following three years until 2018 — a critical time for the transformation of Goodix Technology.
In 2019, Chinese top-tier mobile phone brands began to adopt in-screen fingerprint chips widely. Goodix Technology was the first manufacturer to mass-produce in-screen fingerprint chips in China and benefited a lot from this market wave. However, by 2020, other manufacturers joined the competition with similar products, triggering a price war. The shipment of smartphones decreased in this period, resulting in increased revenue but decreased net profit for Goodix Technology.
The situation worsened in 2021 when both the revenue and net profit of the company fell. It had a loss in the first quarter of 2022.
In such a new market change, Goodix Technology has been seeking new businesses through the capital operation.
As early as 2019, Goodix Technology had acquired a division of Voice and Audio Solutions under NXP B.V. with $165 million and completed the transaction in February 2020. By August 2020, Goodix Technology once again had spent another 39.5 million euros and acquired Dream Chip Technologies GmbH (DCT) in Germany with technological solutions for auto-driving systems.
The two deals enabled Goodix Technology to expand from smartphones and other device areas to the IoT and automotive electronics, diversifying its business layout.
Also, in such a background, the company surprised the industry last year by hiring Sandy Hu, former China President of Texas Instruments, with her years of experience in the American multinational corporation.
She was appointed the company's president in charge of the overall operation and management, reporting directly to Zhang Fan, chairman, and CEO of Goodix Technology.
Beefing up R&D investment is another strategy Goodix Technology sticks to, though it reduced the number of R & D staff from 2056 in 2020 to 1967 in 2021.
From 2019 to 2021, its R & D spending was RMB1.079 billion ($161.3 million), RMB 1.754 billion ($262.2 million) and RMB1.692 billion($253.630 million) respectively.
After becoming the new president last March, Sandy Hu said, "Goodix is at an important stage of transformation from a single product supplier to a comprehensive IC design company." She added that Goodix would integrate its global team to strengthen product planning, marketing, and customer relations building.
