HC Semitek equity change finalized: Huashi Holdings becomes the largest shareholder

On March 29, HC Semitek announced the completion of the transfer registration for the agreed share transfer by shareholders. As of the announcement date, Zhuhai Huafa Industrial Investment Holding Co., Ltd. (hereinafter referred to as "Huafa Industrial Holding") holds 24.87% of the company's shares, becoming the largest shareholder. Huafa Industrial Holding is a wholly-owned subsidiary of Zhuhai Huafa Group Co., Ltd. (hereinafter referred to as "Huafa Group"), which means that Huafa Group has officially taken control of HC Semitek.

According to the announcement, on January 22, 2021, shareholders holding more than 5% of the company's shares, Jing Tian Capital I, Limited and its concerted parties Jing Tian Capital II, Limited, Kai Le Capital Limited, and Shanghai Canrong Industrial Co., Ltd., respectively signed share transfer agreements with Huashi Holdings. Jing Tian I, Jing Tian II, and Kai Le transferred a total of 159,088,014 shares of the listed company to Huashi Holdings, and Shanghai Canrong transferred 20,000,000 shares of the listed company it held to Huashi Holdings.

On March 29, 2021, HC Semitek received the "Confirmation of Securities Transfer Registration" issued by China Securities Depository and Clearing Corporation Limited from shareholders Jing Tian I, Jing Tian I, Kai Le, and Shanghai Canrong, confirming that the transfer registration procedures for the shares under this agreement were completed on March 26, 2021. The nature of the transferred shares is unrestricted circulating shares.

Upon completion of the share transfer, the shareholding ratio of Jing Tian I and its concerted parties decreased to 4.58%, and Shanghai Canrong's shareholding ratio decreased to 5%; Huashi Holdings' shareholding ratio increased to 24.87%, becoming the largest shareholder of the listed company. After the completion of this transaction, the company will conduct early re-elections for the Board of Directors and the Supervisory Board.

▲After the completion of this share transfer, the equity structure and voting rights structure of the relevant parties

Data shows that HC Semitek is a leading industry enterprise with the second largest LED chip production capacity and the third largest revenue scale globally. The company's Mini LED chip products were among the first to enter the market in mass production. In addition, HC Semitek is actively laying out third-generation (compound) semiconductors, extending into industries such as power electronics, radio frequency, and filters.

The transferee of this equity transfer is Huashi Holdings, which is affiliated with Huafa Group. According to available information, Huafa Group is a leading comprehensive state-owned enterprise group in Zhuhai and a well-known leading enterprise nationwide. It has been listed among the "Top 500 Chinese Enterprises" for five consecutive years since 2016, ranking 259th in 2020. The group owns several listed companies, including Huafa Shares, Huajin Capital, Huafa Property Services, Johnson Holdings, and Weiye Shares. After 40 years of development, Huafa Group has successfully evolved into an innovation-driven comprehensive enterprise group with four core businesses—urban operations, real estate development, financial industry, and industrial investment—and two supporting businesses—trade services and modern services.

It is reported that Huafa Group has made significant investments in the chip and semiconductor sector, including Chipone, Foxconn's chip design project, Chuangdate, InnoSilicon, PetaByte, and BYD Semiconductor. Its investment portfolio covers the entire supply chain, including silicon wafers, new materials, IC design tools, semiconductor equipment, display driver ICs, and PMICs.

A representative of Huashi Holdings stated that after acquiring Hcsemitek, Huafa will keep the existing management team unchanged, support the strategic and operational direction of the management, maintain the positive momentum of business transformation and active development over the past year, and leverage the group's advantageous resources to strategically empower Hcsemitek in areas such as capital funding, market expansion, and upstream and downstream supply chain, fully supporting Hcsemitek in further strengthening, expanding, and optimizing its operations.

Since 2019, HC Semitek has established and implemented a strategic direction to adjust its product structure, focusing on Mini/Micro LED. Mini/Micro LED products have achieved large-scale shipments with rapid growth in volume. Meanwhile, the company is strengthening its presence in high-end backlighting and high-end RGB direct display sectors, while advancing the development of horticultural lighting and automotive lighting products. In terms of market strategy, HC Semitek has deepened cooperation across the supply chain, engaging in extensive strategic partnerships with industry giants such as BOE. Additionally, the company's long-term commitment to high-end overseas markets has yielded significant results, with growing influence in the international market and continuous increases in international customers and shipments.

In addition to the LED chip field, HC Semitek has also directed private placement investments toward third-generation compound semiconductors, further extending its business into GaN power devices. Currently, HC Semitek's Zhejiang subsidiary has been approved for the Zhejiang Provincial Third-Generation Semiconductor Laboratory and Technology Innovation Center, and has established a postdoctoral workstation. It is expected to complete the development of chip technology solutions in 2021, followed by gradual mass production.

Industry analysts believe that after years of development, HC Semitek has established strong R&D capabilities, a standardized corporate governance system, and a leading market position; as a state-owned enterprise with revenue exceeding one hundred billion, Huafa Group possesses comprehensive strengths including broad industrial layout, abundant market resources, strong financial power, and professional industrial investment capabilities.

The collaboration between the two parties will yield "1+1>2" benefits, both at the level of listed companies and within the industry. In fact, Huafa Group's investment in Hcsemitek not only aligns with national strategic directions and Zhuhai's semiconductor industry development plans, but also facilitates Huafa Group's expansion into key areas such as LED chips and compound semiconductor materials, with future extensions into power devices, modules, and other broad fields, thereby supporting Huafa's strategic transformation towards the real economy.

This also means that Mini/Micro LED is ushering in a new wave of investment and development. Regarding the potential of the LED industry, Huashi Holdings believes that the past two years have been an adjustment period for the LED industry. The release of new production capacity led to an overall oversupply of LED chip capacity, causing LED chip prices to drop sharply. After two years of adjustment, the global LED industry's prosperity is recovering. Mini/Micro LED technology will lead application upgrades in the next decade, driving the LED industry back to high growth.

For HC Semitek, leveraging Huafa Group's strong strength and diversified industry resources, HC Semitek will broaden funding sources to strengthen R&D capabilities. Meanwhile, it will receive comprehensive support from Huafa Group in upstream supply chain coordination and downstream market expansion, accelerating product structure transformation and further enhancing the listed company's industry position and overall competitiveness.

Source of materials: HC Semitek announcements, Hongzhoukan of Securities Market, Yicai, Daily Economic News, etc.