Succession of the second generation, acquisition of Xiaomi, investment, or acquisition of the second family member

MEMS sensors have become essential components on various smart devices such as smartphones and tablets in your hands, including speed sensors, gyroscopes, pressure sensors, and force sensors, which are known as the "electrical five senses".

Recently, Suzhou Minghe Sensing Technology Co., Ltd. (referred to as "Minghe Sensing"), which produces this type of sensor, submitted a prospectus and is preparing to be listed on the Science and Technology Innovation Board.

In fact, behind the Ming Dynasty sensor is the story of a father cultivating a "second generation" successor. After studying abroad and graduating from the University of Tokyo, Wu Wenyi, born in the 1980s, did not directly return to China. Instead, he worked as a software engineer for several years at a Fortune 500 company in Japan and returned to China in 2011 to join Ming Dynasty Sensing, gradually succeeding his father Wu Nianbo's business empire from 0 to 1.

Nowadays, the MEMS (Micro Electro Mechanical System) sensors produced by Mingyi Sensing are not only applied to intelligent devices such as Honor, Xiaomi, Lenovo, Samsung, but also imported to automotive customers such as BYD. At the same time, this company has also received investment from industrial capital such as Xiaomi, BYD, and SAIC.

As a national specialized and innovative "little giant" enterprise, why is this company favored by major industrial capital? What are the other stories behind this' father son soldier '?

After the workshop director made an IPO

Acquisition of a US company

The predecessor of Mingrui Sensing was Miradia, an American company founded in 2003. It has received $80 million in financing from renowned investment institutions such as Sequoia Capital and JAFCO.

It is worth mentioning that Miradia had a world-class MEMS research and development team at the time, holding over 130 patented technologies. Its first product, Denali, became the world's first all silicon MEMS micro mirror (the main chip of the projector) to achieve XGA resolution.

At the end of 2010, Suzhou Gutechi acquired Miradia for 3.6 million US dollars, and the next year, on this basis, it invested to create Mingshen Sensor. At present, the team is located in Suzhou, Shenzhen, Silicon Valley of the United States and Hsinchu, Taiwan, China, China.

It is reported that the main product of Mingyi Sensor is MEMS accelerometers, and other products include MEMS pressure sensors, sensor modules, etc. With the advantages of miniaturization, low cost, high performance, and high reliability, Mingyi became the first Chinese MEMS sensor enterprise to ship 100 million pieces within just 5 years of its establishment.

At present, Mingyi Sensing has supplied in bulk to well-known end customers in the industry such as Honor, Xiaomi, Lenovo, Goethe, Samsung, Google, Comcast, etc. In addition, the company's vehicle grade MEMS accelerometers have been supplied in bulk to Neusoft Group and imported to automotive grade customers such as BYD.

It can be said that the birth and development of Ming Dynasty sensing are closely related to Suzhou Gu Technology. Behind Suzhou Guchen stands a calm and determined founder - Wu Nianbo. Wu Nianbo was born in 1956 and holds a doctoral degree. He served as the workshop director and factory director of Suzhou Radio Components Factory No. 12.

In 1991, Wu Nianbo established Suzhou Guchen Electronics. At the beginning of its establishment, Suzhou Guchen was very difficult and was jokingly referred to by Wu Nianbo as the "three nothings" - no money, no technology, no market. At first, Guchen was a joint venture founded by a school run factory. Although it was a joint venture, the foreign party was only responsible for providing the market at that time, and Wu Nianbo had to solve the financial problem himself.

In this situation, Wu Nianbo can only borrow from the bank, but the bank has nothing to mortgage and is unwilling to lend. Therefore, he went to the bank every day to grind, commuted to and from work with others, and spent a week soaking in it. Finally, the bank helped him resolve a $190000 loan. Wu Nianbo borrowed another $100000 from a friend, scraped together $290000, and finally opened a business.

$290000 can only be used to buy equipment, and the money for purchasing materials still needs to be raised by oneself, "Wu Nianbo sighed." At that time, the conditions were very difficult, and the company did not have a safe deposit box. All the checks and official seals were packed in one lunch box

After the establishment of the company, Wu Nianbo lived and fed in the factory every day for a whole year. He believes that the most important thing in entrepreneurship is to create an entrepreneurial atmosphere, and he should take the lead in encouraging everyone to work together. What others are required to do, one must do it oneself. Wu Nianbo paid off all the debts in just one year.

Hard work pays off to those who have a heart. In November 2006, Suzhou Gu Tech successfully went public, becoming the first A-share in China's diode manufacturing industry. The following year, Wu Nianbo also made it to Forbes' list of the most expensive bosses of Chinese listed companies. Nowadays, Suzhou Guzhen has been in the market for 30 years, and the sales of rectifier diodes have consistently ranked first in China for many years, and have entered the world's top tier.

The second generation of enterprises has been honed for many years,

Returning to China to "kill" and create a path of bloodshed

Unlike the second generation who joined their own company after graduation, Wu Wenyi, born in 1982, chose to stay in Japan to work and hone himself after graduating with a master's degree from the University of Tokyo in Japan. He has served as the project manager of the Advanced Communication Department of Alpai Corporation in Japan, mainly responsible for software architecture design and development, and coordinating and controlling project development in Europe, Japan, and China.

According to a report from Huashan Education, Wu Wenyi enjoys pursuing a career related to engineering, "including developing new products and researching new technologies." While working in Japan, he feels Japan's rigorous and down-to-earth engineering culture, so he has always maintained a sense of awe towards product development.

He once stated that during that period, he had only a vague plan for his life. "When I was a child, my father often told me that I wanted to attend the best university, train at Fortune 500 companies, and then return to my own business." This became a responsibility for Wu Wenyi, just like crossing a barrier.

After working as a software engineer in Japan for three years, Wu Wenyi decided to return to his home country for development in 2011, when he was preparing to establish Mingyi Sensing.

After returning to China, Wu Wenxuan joined Mingxuan Sensing. At that time, the whole team had only five people from Taiwan, China, China, and a Chinese CEO from Silicon Valley. The company had not been officially registered. It can be said that Wu Wenyi accompanied Mingyi Sensing from 0 to 1, leading the completion of team building, product planning, and other work.

At the beginning of making sensors, the main purpose was to survive, and we didn't have much funds. Although Suzhou Guchen also had blood transfusions, Wu Wenyi wanted to use his own abilities to "kill" a path of survival.

In 2012, Mingyi Sensing achieved zero revenue; In 2013, achieved a revenue of 8 million yuan; In 2014, the revenue reached 20 million yuan, followed by two consecutive years of revenue reaching 40 million yuan and 70 million yuan. Under the leadership of Wu Wenyi, Mingyi Sensing gradually embarked on the right track. In September 2016, Wu Wenyi returned to his parent company Suzhou Guchen as an assistant to the general manager. Four years later, at the age of 64, Wu Nianbo chose to retire behind the scenes and entrusted the entire burden of the company to his son Wu Wenyi. Wu Nianbo became the lifelong honorary chairman of Suzhou Guchen.

In this way, this "second generation of enterprises" finally officially took over.

Xiaomi and BYD bet,

Has achieved profitability for two consecutive years

Rui Beast analysis shows that since its establishment, Mingxiang Sensing has completed a total of four rounds of financing, with shareholders including large industrial capital and well-known VC/PE figures. In terms of shareholder shareholding, prior to the IPO, the actual controllers of Mingxiang Sensing were Wu Nianbo, Wu Wenxiang's father and son, and DAVID DA-WEI WANG, who could control a total of 40.65% of their voting rights. In addition, Xiaomi Changjiang holds 5.02% of the shares, SAIC's Shangqi Capital holds 3%, BYD holds 2.48%, SMIC Juyuan holds 1.26%, and Yuanhe Holdings holds 1%.

The reason why Mingyi Sensing is highly sought after by investment institutions is also closely related to the rapid growth of the industry. According to Yole Intelligence statistics, the global sales volume of MEMS has increased from 20168 million in 2018 to 30.359 billion in 2021. It is expected to reach 48.708 billion in 2027, with a compound growth rate of 8.20% from 2021 to 2027; The global market size of MEMS has increased from $9.994 billion in 2018 to $13.595 billion in 2021, and is expected to reach $22.253 billion in 2027, with a compound growth rate of 8.56% from 2021 to 2027.

Specifically, in terms of MEMS sensors, the global market share of the company's MEMS accelerometer in 2021 was 2.11%, ranking seventh among MEMS accelerometer manufacturers globally; In the field of consumer electronics, the sales of MEMS accelerometers by Mingyi Sensing in 2021 were 91 million units, with a global market share of 8.96%.

In terms of revenue, according to the prospectus, from 2020 to 2022, Minghua Sensing achieved operating revenue of RMB 85.0351 million, RMB 170 million, and RMB 198 million, respectively, with net profits attributable to the parent company of RMB 50.0485 million, RMB -2.44305 million, and RMB 27.8765 million; The deduction of non net profit was -211.244 million yuan, 14.658 million yuan, and 26.1035 million yuan, respectively. Therefore, in fact, the company has achieved profitability in 2021.

This cannot be separated from the strong investment in research and development of open-minded sensing. From 2020 to 2022, the company's R&D investment was 32 million yuan, 32 million yuan, and 22 million yuan, respectively. The cumulative R&D investment over the three years was 86 million yuan, accounting for 19.04% of the cumulative operating revenue. As of the end of 2022, the number of R&D personnel for Minghua Sensor is 32, accounting for 40% of the total number of employees.

However, the comprehensive gross profit margin of Mingyi Sensing is lower than the average of comparable companies.

According to the prospectus, from 2020 to 2022, the comprehensive gross profit margin of Mingxiang Sensing was 18.83%, 30.64%, and 34.24%, respectively, lower than the average of 52.16%, 50.39%, and 52.75% for comparable companies in the same industry in China. The explanation given by Mingyi Sensing is that there are differences in product types and downstream application fields.

Secondly, there is a risk of a single product structure in the Ming Dynasty sensor. From 2020 to 2022, the proportion of Minghua Sensing MEMS Accelerometers in the main business revenue was 93.92%, 96.70%, and 98.70%, respectively. In response, Mingxiang Sensing wrote, "If it is not possible to enrich product categories and expand downstream application fields in the future, or if the competition in the segmented product market intensifies and there are adverse changes in downstream market demand, there may be a risk of decline in business performance.

In addition, there is a risk of high proportion of related party transactions and reliance on a single supplier in Mingyi Sensing.

From 2020 to 2022, the amount of related procurement of Suzhou solid technology by Minghua Sensing was 21 million yuan, 31 million yuan, and 33 million yuan, respectively, accounting for 25.41%, 20.22%, and 21.18% of the total procurement amount in each phase.

During the same period, ASIC chips, one of the raw materials for Ming Dynasty's sensing, were all purchased from nano chip micro companies, with associated purchases of 22 million yuan, 35 million yuan, and 47 million yuan, accounting for 27.47%, 22.71%, and 29.62% of the total purchases in each phase. The total proportion of the two related party transactions mentioned above to the total procurement amount of each period is 52.88%, 42.93%, and 50.8%, respectively.

In this IPO, the company plans to raise 620 million yuan for the development and system application projects of high-performance and high reliability MEMS inertial sensors, the construction of research and development centers, the construction of MEMS sensor testing bases, and supplementary working capital.

Usually, when investors consider "specialized, refined, and innovative" technology companies, the first thing to consider is the profitability of the company. Deng Feng, founding management partner of Northern Lights Venture Capital, once stated that although technology companies may not be profitable in the initial research and development stage, their business models and products should have profitability and high gross profit margins in the future. At the same time, enterprises need to consider how to apply technology to other fields in order to obtain greater market opportunities.

It can be said that Mingyi Sensing was a "test question" given to his son by Wu Nianbo in the past, and now Wu Wenyi, who has officially taken over, is about to submit this answer sheet with his family's second IPO. In the future, how this "specialized, refined, and innovative" enterprise can continue to expand market share, increase comprehensive gross profit margin, and solve the problem of a single product structure is what this "second generation" enterprise will need to consider next.