7.55 billion yuan! HuaRun Micro and the Big Fund Phase II, among others, are jointly investing in a 12-inch production line project.

On June 8, HuaRun Micro issued an announcement stating that its wholly-owned subsidiary, HuaRun Microelectronics Holding Co., Ltd. (hereinafter referred to as “HuaWei Holding”), plans to jointly sign an Investment Agreement with the Second Phase of the National Integrated Circuit Industry Investment Fund Co., Ltd. (hereinafter referred to as “Big Fund II”) and Chongqing Xiyong Microelectronics Industrial Park Development Co., Ltd. (hereinafter referred to as “Chongqing Xiyong”) to establish RuiXi Microelectronics (Chongqing) Co., Ltd. (provisional name) (hereinafter referred to as the “Project Company”).
The proposed registered capital of the project company is 5 billion RMB, and the project company will invest in and build a 12-inch power semiconductor wafer production line. Among this amount, HuaWei Holdings will contribute 950 million RMB of its own funds, accounting for 19% of the project company’s registered capital after the contribution is completed. According to the announcement, the total planned investment for the 12-inch power semiconductor wafer production line project is 7.55 billion RMB. Upon completion, the project is expected to achieve a monthly production capacity of 30,000 12-inch mid-to-high-end power semiconductor wafers, and will also include supporting facilities for 12-inch epitaxial and thin-wafer processing capabilities. The project company’s contribution methods and amounts are as follows:

Image source: Screenshot from China Resources Micro’s announcement

The announcement stated that the company’s capital contribution to the project company is determined based on the company’s strategic plan as well as its own financial and funding conditions. The entire investment amount is sourced from the company’s own funds. Each shareholder of the project company must pay up 60% of the agreed-upon capital contribution by July 31, 2021, and must pay the remaining 40% of the agreed-upon capital contribution by December 31, 2021.

In addition, within three months of the establishment of Runxi Microelectronics (Chongqing) Co., Ltd. in Xiyong, Chongqing, and after the relevant parties have completed the approval procedures, Chongqing Xiyong intends to transfer its 15% equity stake in the project company to a subsidiary of China Resources Group (Microelectronics) Co., Ltd. (which has not yet been established). The transfer price for the target equity or the total investment amount shall be determined in accordance with the procedures applicable to state-owned asset transactions. The Second Phase of the Big Fund and Huawei Holdings have agreed to the aforementioned equity transfer and undertake to waive their respective pre-emptive purchase rights, as well as to cooperate fully in handling the corresponding industrial and commercial registration change procedures.

The announcement indicates that, over the past twelve months, Chongqing Xiyong has been a shareholder of the company’s wholly-owned subsidiary, HuaRun Microelectronics (Chongqing) Co., Ltd. Based on the principle of prudence, Chongqing Xiyong has been identified as an associated party of the company. Furthermore, the Second Phase of the Big Fund has an association with the Big Fund, which holds more than 5% of the company’s shares. In accordance with the principle that substance prevails over form, the Second Phase of the Big Fund has been recognized as an associated party of the company. HuaRun Group (Microelectronics) Co., Ltd., the company’s controlling shareholder, and its subsidiaries under its control are also considered associated parties of the company. This transaction constitutes a joint investment with an associated party and does not constitute a material asset restructuring.

In its announcement, HuaRun Micro stated that this external investment and related-party transaction represents a prudent decision made by the company to achieve its strategic goals and secure long-term interests. By optimizing industrial layout and moderately expanding its power semiconductor production capacity, the company aims to strengthen its competitive edge in the market, further enhance the core competitiveness of its products, thereby boosting its sustainable development capabilities and solidifying its leading position in China’s power semiconductor industry.

Image source: Screenshot from China Resources Micro’s announcement Image source: Screenshot from China Resources Micro’s announcement

Key words: