Concentric Diversification And Value Analysis Of Wuhan Jingce Electronic Group Co.,Ltd.

Under the background of the transfer of the semiconductor industry to Chinese mainland and anti-globalization,the localization process of semiconductor equipment has accelerated,more and more semiconductor equipment companies have been listed.The semiconductor equipment industry has significant cyclical volatility,which affects the performance and stock prices of companies in the industry.In this context,diversification has become one of the important strategic choices for semiconductor equipment companies to ease the cyclical nature of the industry.Semiconductor testing equipment manufacturer Jingce Electronic Group has carried out concentric diversified operations.The case analyzed the motivation and process of electronic concentric diversification,the changes in capital cost,profitability,earnings volatility,financial risk,economic added value before and after concentric diversification,and the short-term and long-term market reactions after concentric diversification.It is found that the long-term excess return of 12,24,36 and 48 months is positive,but the company’s profitability and economic added value decline after concentric diversification,earnings volatility and financial risk increase,and the short-term CAR value of the event window [-3,3] and [-5,5] is negative.The results of this paper support the view that concentric diversification brings about precision electronic discounts.In view of the above analysis,this paper puts forward the following summary and suggestions:(1)Reasonably select the resource acquisition/configuration method;(2)Fully analyze new market characteristics;(3)Clarify the competitiveness of new products.