PATEO closed a 70 percent purchase of an optical chip designer for up to RMB1.4 billion

PATEO CONNECT Technology (Shanghai) Corporation told the Stock Exchange of Hong Kong on October 2 that its acquisition of equity in Chengdu Meenyi Electronic Technology, a fabless chip designer, had completed that day. The completion announcement names the company only as the target company, carrying the definition over from the August 7 announcement it incorporates by reference. The company said it would hold 53,518,613 shares in the target, about 70 percent of its total issued shares, and that the target had become a non-wholly owned subsidiary whose results would be consolidated into the group’s.

The filing put the maximum share transfer consideration at RMB1,400 million. It said the market value of the 70 percent holding, taken pro rata from a valuation of RMB2,700 million for the whole of the target’s shareholders’ equity, was RMB1,890 million.

PATEO gave an architectural reason for the purchase. It said automotive E/E architecture was gradually evolving toward domain-centralized and central-computing designs, that increasing use of cameras, lidar and high-definition cockpit displays continued to raise in-vehicle data volumes while edge AI placed greater demands on processing and transmission, and that bandwidth, latency, electromagnetic-interference immunity and reliability requirements were rising with them. Optical communication, with what it called potential advantages in bandwidth, interference immunity and lighter wiring harnesses, represented “one of the potential technological directions” for high-speed in-vehicle communications.

The same document set out where the target’s value was assessed to lie. The first basis listed for the consideration was the industry outlook, including rapid growth in the optical communication chip industry driven by increasing demand from downstream AI and data center applications. The filing described the target as supplying optical communication components used mainly in optical modules and other downstream optical communication applications.