HG Semiconductor Limited (“HG Semiconductor”, together with its subsidiaries, “the Group”; Stock Code: 6908.HK) is pleased to announce that the Group has officially entered into subscription agreement (“Subscription Agreement”) with Mr. Zhu Gongshan (“Mr. Zhu”), the Founder, Chairman and Executive Director of GCL Technology Holdings Limited (“GCL”, Stock Code: 3800.HK) regarding the Investment Agreement (“Investment Agreement”) on 4 August 2022.
Pursuant to the Investment Agreement, the Group has agreed to issue, and Mr. Zhu has agreed to subscribe for 60 million subscription shares (“Shares Subscription”) and 60 million warrants (“Warrants Subscription”). In view that the due diligence examinations have been completed, and that Mr. Zhu is reasonably satisfied with the results of the examinations, he will participate in the Shares Subscription and Warrants Subscription through his designated beneficially owned entity Profit Act Limited. Upon completion of the Shares and Warrants Subscription, Mr. Zhu will become the major strategic shareholder of the Group.
As at 30 September 2022, the Group has 573,019,000 shares in issue. Pursuant to the Share Subscription Agreement, the 60 million subscription shares represent approximately 10.47% of the existing issued share capital of the Group. After deduction of relevant costs and expenses, the net proceeds from the Shares Subscription are estimated to be approximately HK$180 million. The net price per subscription share upon the completion of the Shares Subscription is estimated to be approximately HK$3.00 per subscription share. In addition, assuming full exercise of the subscription rights attaching to the warrants, the 60 million warrant shares represent approximately 10.47% of the existing issued share capital of the Group, while the gross and net proceeds from the Warrants Subscription are estimated to be approximately HK$220.8 million. The maximum net price per warrant share upon full exercise of the subscription rights attaching to the warrants is estimated to be approximately HK$3.68 per warrant share. The Group intends to use the maximum proceeds from the Shares Subscription and the Warrants Subscription of approximately HK$400.8 million for the development of its gallium nitride (GaN) business. The completion of the Shares Subscription and Warrants Subscription are subject to the satisfaction and/ or fulfillment of certain conditions precedent, and the Group will convene an extraordinary general meeting (EGM) to seek a specific mandate from shareholders for the allotment and issue of the Shares.
Mr. Zhu is the Founder and Executive Director of GCL Technology Holdings Limited. He was a member of the 12th National Committee of the Chinese People’s Political Consultative Conference (the “CPPCC”) and is currently a member of the 12th Jiangsu Province Committee of the CPPCC, the chairman of Global Green Energy Industry Council, the vice chairman of Global Innovation Centre, the chairman of Asian Photovoltaic Industry Association, the deputy director of the Green and Low Carbon Development Promotion Committee of China Enterprise Confederation, the executive vice president of the Energy Storage and Electric Vehicle Branch of China Electricity Council. Over the years, Mr. Zhu has been involved in the fields of power photovoltaic, natural gas, new energy vehicle operations and semiconductor sectors etc. Meanwhile, Mr. Zhu has a great influence in Xuzhou; with all major strategic deployment of GCL Group rooted in Xuzhou and started in Jiangsu.
Earlier on, HG Semiconductor also entered into a strategic cooperation framework agreement on 7 September 2022 with Golden Concord Group Limited (“Golden Concord Group”), a discretionary trust with Mr. Zhu Gongshan and his family members as beneficiaries, with the intention to establish close cooperation in application of gallium nitride (“GaN”) power chips in the fields of new energy, including Golden Concord Group or its subsidiaries will be involved in equity of the Group or its subsidiaries to establish in-depth cooperation. HG Semiconductor and Golden Concord Group will establish a domestic new energy joint venture (the “JV Company”) to tap into the application of GaN chips in the field of new energy, including but not limited to technologies and equipment on charging/exchanging batteries, energy storage technology and related equipment and distributed solar inverters. The Group will provide technical support to the JV Company and jointly develop application products based on silicon-based power chips and third-generation semiconductors. Mr. Zhu’s investment in HG Semiconductor through his family trust and the signing of the strategic cooperation framework agreement with the Group are not only a recognition of the future development potential of the third-generation semiconductor business, but also demonstration of his confidence in the strategic development of the Group. The completion of the investment agreement signifies that the Group has formally established a close partnership with Golden Concord Group and will further develop its integrated industrial chain in the third-generation semiconductor arena and achieve rapid development of production capacity and products.
After nearly two years of business transformation, the Group has established a relatively prominent advantage in the field of GaN power semiconductors and new energy sector. With the completion of the Subscription Agreement with Mr. Zhu Gongshan and leveraging on his background as the major strategic shareholder of the Group, the Group expects that Mr. Zhu can (i) coordinate the resources of the new energy industry and form strategic synergy with the Group’s third-generation semiconductors (especially power chips) to form complementary industrial resources; (ii) use his financial resources and business network to assist the Group in the rapid development of production capacity and products; (iii) assist the Group to work closely with local governments to improve the policies and supports for the third-generation semiconductor industry; and (iv) use his own experience in in operation and management to assist the Group to build up its talents, operations, technology, as well as research and development.
With the evolution of the technological revolution, the semiconductor industry has been deeply integrated into the new energy industry. For the future of mass energy system, the third-generation semiconductor GaN will play a core role and serve as a bridge between photovoltaic and mass energy systems. The management of the Group believes that the industrial resources of Golden Concord Group are expected to bring vast application opportunities for HG Semiconductor, enabling the Group to further accelerate the development of GaN technology and application in the field of new energy. The Shares Subscription and Warrants Subscription represent a good opportunity for the Group to raise additional capital for the its GaN business development, thereby enhancing the Group’s research and development capabilities and moving towards the goal of becoming an integrated device manufacturing (“IDM”) enterprise with semiconductor design and manufacturing as the core, as well as the integration of manufacturing, testing, and sales. In view of the strong demand for high-tech semiconductor products in both domestic and overseas markets, coupled with the promotion of national policies, the Group expects its GaN business development to grow steadily.
About HG Semiconductor Limited
HG Semiconductor Limited (6908.HK) is principally engaged in semiconductor product business in China, including the design, development, manufacturing, subcontracting services and sales of light-emitting diode (“LED”) beads and a new generation of semiconductor gallium nitride (“GaN”). The Group is committed to accelerating its research and development and expansion in the application of GaN related products, with an aim to become a leading semiconductor company with the integration of design, manufacturing and sales of semiconductor chips, as well as providing total solutions with higher efficiency and competitive system cost.
For more details, please visit www.hg-semiconductor.com