HUA HONG SEMI announces the acquisition of Huali Micro!

The long-rumored injection of Huahong Semiconductor by Huahong Micro finally materialized!

On the afternoon of August 17, Huahong Semiconductor Co., Ltd. (hereinafter referred to as "Huahong Semiconductor" or "the Company"), a major domestic wafer foundry, announced that in order to resolve the industry competition issues related to its IPO commitments, the Company is planning to acquire a controlling stake in Shanghai Huahong Microelectronics Co., Ltd. (hereinafter referred to as "Huahong Micro") through the issuance of shares and cash payment, along with raising supporting funds (hereinafter referred to as "this transaction").

Huahong Semiconductor stated that according to the "Administrative Measures for Major Asset Restructuring of Listed Companies" and the "Listing Rules for Stocks on the Science and Technology Innovation Board of the Shanghai Stock Exchange" and other relevant regulations, this transaction is expected not to constitute a major asset restructuring; this transaction constitutes a related party transaction but will not lead to a change in the actual controller of the Company and does not constitute a restructuring listing. Due to the uncertainties surrounding this transaction, in order to ensure fair information disclosure, protect the interests of investors, and avoid significant impacts on the Company's stock price, the Company's stock will be suspended from trading starting from August 18, 2025 (Monday), with the suspension expected to last no more than 10 trading days.

According to information, both Huahong Semiconductor and Huahong Micro are assets under the Huahong Group, with Huahong Microelectronics' assets mainly comprising Huahong's Fifth and Sixth Factories. The Fifth Factory, established in 2010, is an 8-inch wafer fab primarily covering the 55-28nm process nodes, with a monthly production capacity of approximately 38,000 wafers; the Sixth Factory is a 12-inch wafer fab mainly covering the 28nm-14nm processes. Clearly, the Fifth Factory under Huahong Micro overlaps and competes with the processes currently covered by Huahong Semiconductor.

In this announcement, Huahong Semiconductor also stated that the target assets for this acquisition are the equity corresponding to the assets operated by Shanghai Huahong Micro that compete with Huahong in the 65/55nm and 40nm processes (the Fifth Factory). Currently, these target assets are in the separation stage.

The announcement indicated that the acquisition transaction is still in the planning stage, and the Company is currently in discussions with potential transaction parties. The preliminary identified transaction parties are Shanghai Huahong (Group) Co., Ltd., Shanghai Integrated Circuit Industry Investment Fund Co., Ltd., National Integrated Circuit Industry Investment Fund Phase II Co., Ltd., and Shanghai Guotou Xian Dao Integrated Circuit Private Investment Fund Partnership (Limited Partnership), with the final transaction parties to be determined based on the information disclosed in the restructuring plan or restructuring report.

Huahong Semiconductor intends to acquire a controlling stake in the target company through the issuance of shares and cash payment and to raise supporting funds. Currently, Huahong Semiconductor has signed a "Share Issuance and Cash Purchase Asset Intention Agreement" with Shanghai Huahong (Group) Co., Ltd.

Huahong Semiconductor emphasized that the scope of the target assets for this transaction, specific transaction methods, transaction plans, share issuance prices, and target asset pricing arrangements will be determined through negotiation among the transaction parties. The above agreement represents the preliminary intention reached by the transaction parties regarding this transaction, and the specific plan for this transaction will be determined by the transaction parties through the signing of formal documents Risk Warning and Disclaimer

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