According to a report from Caixin News on December 19 (Reporter Liang Xiangcai), a month later, Yunnan Lincang Xinyuan Germanium Industry (002428.SZ) subsidiary Xinyao Semiconductors intends to increase capital by 0.4 billion yuan, introducing shareholders like the 'national team' and the 'Huawei system' may give up the position of the second-largest shareholder.

"After this round of financing is completed, the company still Holds about 56% of the equity, maintaining actual control." A relevant person in charge of the company conveyed this to Caixin News reporters regarding the capital increase and share expansion plan.

This evening, Yunnan Lincang Xinyuan Germanium Industry announced that its subsidiary Yunnan Xinyao Semiconductors Co., Ltd. (hereinafter referred to as 'Xinyao Semiconductors') will introduce new investors through capital increase and share expansion, including Shenzhen Venture Capital Manufacturing Industry Transformation and Upgrading New Materials Fund (hereinafter referred to as 'Shenzhen Venture Capital Fund') and Shenzhen Yuan Zhi Xing Huo Private Equity Investment Fund Partnership (hereinafter referred to as 'Yuan Zhi Xing Huo').

According to the capital increase agreement, Shenzhen Venture Capital Fund and Yuan Zhi Xing Huo will invest 0.3 billion yuan and 0.1 billion yuan respectively, subscribing to the newly registered capital of Xinyao Semiconductors of 0.16 billion yuan; after the completion of the capital increase, Shenzhen Venture Capital Fund and Yuan Zhi Xing Huo will respectively Hold 25% and 8.3333% of the equity of Xinyao Semiconductors.

Due to Yunnan Lincang Xinyuan Germanium Industry waiving the right of first offer for this capital increase of Xinyao Semiconductors, after the completion of this capital increase, the equity held by Yunnan Lincang Xinyuan Germanium Industry will decline from 84.5294% to 56.3529%. The company's control position remains unchanged, and the scope of consolidated financial statements will not change. This capital increase still requires approval from the Shareholders' Meeting of Xinyao Semiconductors and the waiver of rights by other shareholders before it can be implemented.

It is noteworthy that in this capital increase plan, the company will pledge its 5% equity in Xinyao Semiconductors to the Shenzhen Venture Capital Fund as collateral for the repurchase obligation under the shareholder agreement.

According to the current plan, the second-largest shareholder of Xinyao Semiconductors, Hubble Technology Venture Capital Co., Ltd. (hereinafter referred to as 'Hubble Technology'), will see its shareholding ratio decrease from 9.3454% to 6.2303%, positioning it as the fourth largest shareholder behind Shenzhen Venture Capital Fund and Yuan Zhi Xing Huo. Tianyancha shows that Hubble Technology is a wholly-owned subsidiary controlled by Huawei Investment Holdings Co., Ltd.

Regarding the reason for this capital increase and share expansion, Yunnan Lincang Xinyuan Germanium Industry stated that it is based on the current actual situation and operational development considerations of Xinyao Semiconductors, which aligns with the company's long-term development plan. The infused funds can be used for research and development, production operation, and the purchase of factories and equipment.

Currently, Xinyao Semiconductors is still in a state of loss. The announcement shows that from January to August 2024, the company achieved a revenue of 60.6768 million yuan, a net income of -2.8932 million yuan, and a net cash flow from operating activities (CFO) of -10.2637 million yuan.

It is worth mentioning that in November, Yunnan Lincang Xinyuan Germanium Industry increased its investment in Xinyao Semiconductors and has now completed the relevant procedures. Subsequently, the company's top three shareholders are Yunnan Lincang Xinyuan Germanium Industry, Hubble Technology, and Huifeng (individual), with shareholding ratios of 84.5294%, 9.3454%, and 6.1252%, respectively.

At that time, Yunnan Lincang Xinyuan Germanium Industry priced its 97.6155% shareholding in Zhongke Xinyuan at 0.222 billion yuan, subscribing approximately 0.191 billion yuan of new registered capital for Xinyao Semiconductors; Huifeng priced its 2.3845% shareholding in Zhongke Xinyuan at 5.4257 million yuan, subscribing approximately 4.6628 million yuan of new registered capital for Xinyao Semiconductors.

Xinyao Semiconductors was established in 2013, and its main business currently involves the production and sales of semiconductor materials, gallium arsenide wafers, and indium phosphide wafers.