After nearly three months of planning, Goertek Inc. (002241.SZ), a giant in the Chinese acoustic industry, has announced the termination of its billion-dollar acquisition.

On the evening of October 17, Goertek issued a notice stating that it has decided to halt plans to acquire 100% equity in Mega Precision Technology Limited and Channel Well Industrial Limited, both wholly-owned subsidiaries of Luen Fung Commercial Holdings Limited.

In its announcement, Goertek explained that despite actively pursuing due diligence, auditing, and evaluation processes, as well as multiple rounds of discussions with the counterparties, the two parties ultimately "failed to reach an agreement on the key terms related to the transaction."

This acquisition plan was first unveiled on July 22, 2025, when Goertek announced that it had reached an initial intention with Hong Kong's Luen Fung Commercial Group to acquire 100% equity of its wholly-owned subsidiaries Mega Precision Technology Limited and Channel Well Industrial Limited for approximately HKD 10.4 billion (about RMB 9.5 billion) using self-owned or raised funds.

Goertek previously indicated that the purpose of the acquisition is to enhance the company's comprehensive competitiveness in the field of precision components, deepen vertical integration capabilities, and continuously strengthen collaboration with leading customers in the industry. The "leading customers" referenced here undoubtedly includes major consumer electronics companies like Apple.

The termination of this nearly billion-dollar acquisition by Goertek is perceived by the market as another instance of an industry merger driven by the "Apple supply chain" logic.

Renowned Apple supply chain analyst Ming-Chi Kuo has pointed out that Apple often instructs its core suppliers to undertake strategic acquisitions to modularly integrate and streamline the supply chain structure, thereby reducing supply risks while lowering overall industry costs and increasing terminal profits.

Specifically, Mega Precision and Channel Well are among Apple's original manufacturers of mobile phone structural components, and with Apple's foray into the smartwatch business, these companies have become core suppliers of metal housings for their watches.

Based on product trends, Apple has been focusing on lightweight wearable devices in recent years, including the Apple Watch, bands, and AR glasses. In lightweight wearables, the proportion of durable metal precision components, such as titanium alloy hinges, is gradually increasing, enhancing the significance of metal processing within Apple's product ecosystem.

Goertek holds a first-mover advantage in integrating components for wearables and has become a supplier of acoustic modules and optical components for companies like Huawei, Samsung, Xiaomi, Meta, and Amazon, as well as acting as an original equipment manufacturer.

From an industrial logic perspective, as consumer electronics wearable devices become increasingly sophisticated, the supply chain is expected to exhibit a trend of high integration. For instance, an AI glasses product will require synchronized design of optical and acoustic components with precision structural parts, thereby improving product performance and stability. A more elongated supply chain means integration is fragmented by division of labor, which hinders Apple and other consumer electronics giants from efficiently controlling product performance and costs.

From an economic standpoint, systemic suppliers can better carve up the value chain with industry leaders, creating a "win-win" situation.

If this acquisition had been realized, Goertek would have transitioned from being a mere component or module supplier for Apple to a "subsystem integration supplier" similar to Luxshare Precision, solidifying its position as one of Apple's core suppliers.

Despite the unexpected termination of this nearly billion-dollar acquisition, it appears that Goertek remains steadfast in its long-term strategic plans. The company stated in the announcement that it would continue to methodically carry out its operational management activities in line with established strategic objectives, actively promote its long-term healthy growth through intrinsic development and diversified investments and acquisitions, and continually enhance the quality and value of the company, better rewarding all its shareholders.

Regarding performance, in the first half of 2025, Goertek achieved revenue of 37.549 billion RMB and a net profit attributable to shareholders of 1.417 billion RMB.

In terms of secondary market performance, since the acquisition was announced on July 22, Goertek's stock price has steadily increased, hitting a market capitalization above 100 billion RMB. After surpassing 40 RMB per share on October 9, the stock began to gradually decline and closed at 31.2 RMB per share on October 17, with a total market value of 109.2 billion RMB, reflecting a cumulative price increase of over 35% and a market value growth of approximately 26.1 billion RMB.

(Disclaimer: The content of this article is for informational purposes only and does not constitute investment advice. Investors should assume their own risk when making trading decisions.)