Editor's Note:

On January 25-26, 2024, China Securities Regulatory Commission held the 2024 System Work Conference and emphasized that it should highlight the concept of investor orientation. To help investors better understand the real development situation and value of the enterprise, further protect the legitimate rights and interests of investors, etc., Caijing.com and 'Science and Technology Innovation Board Daily' jointly created the 'Shareholders Meeting in Perspective' column.

The 'Shareholders Meeting in Perspective' column is reported on site, focusing on the core management of the chairman of the listed company and others at the shareholders meeting, focusing on the long-term strategy, major decisions, and operational policies of the enterprise, aiming to enhance the image of the enterprise in the capital market, optimize investor relations management, and improve the governance and development of the listed company.

▍Current Enterprises

Youyan Silicon

▍Company Profile

Youyan Silicon mainly engages in the research, production, and sales of semiconductor silicon materials, with products including semiconductor silicon polished wafers, silicon materials for etching equipment, and semiconductor zone-melting silicon single crystals, used in the manufacture of discrete devices, power devices, integrated circuits, and silicon components for etching equipment, applied in fields such as automotive electronics, industrial electronics, and aerospace.

▍Corporate Highlights

The company was the first in the country to achieve the industrialization of 6-inch and 8-inch silicon wafers and to develop technology for the 12-inch process, which strongly supported the development of China's integrated circuit industry.

▍Profit Model

The company generates revenue and profit by selling semiconductor silicon wafers to downstream chip manufacturing enterprises and selling silicon crystals used for etching equipment to downstream etching equipment component manufacturers.

According to the Star Daily on January 6 (Reporter Wu Xuguang), recently, the 2024 third extraordinary Shareholder meeting of Youyan Silicon was held at the company's headquarters in Peking.

This Shareholder meeting adopted on-site voting and online voting to review and approve the proposals regarding the capital increase to the affiliated company ShanDong Youyan Aisi Semiconductor Materials Co., Ltd. and the proposal for amending the 'Articles of Association' and handling the filing registration.

According to the meeting proposals, the company plans to increase capital with the affiliated party China Youyan Technology Group Co., Ltd. (referred to as 'China Youyan') to the affiliated company ShanDong Youyan Aisi Semiconductor Materials Co., Ltd. (referred to as 'ShanDong Youyan Aisi') at a price of 1.02 yuan for each 1 yuan of registered capital, for a total capital increase of 0.76 billion yuan. The company plans to increase capital by 0.38 billion yuan, with 0.371 billion yuan counted into registered capital and 9.0992 million yuan counted into capital reserve fund.

Upon completion of this transaction, the company will Hold 28.11% equity in ShanDong Youyan Aisi.

Youyan Silicon, as one of the few domestic enterprises currently able to stably mass-produce 8-inch semiconductor silicon wafers and produce zone-melted silicon single crystals, is making this external investment in 12-inch semiconductor wafers to further strengthen its main business.

In recent years, with the development of integrated circuit processes and technologies, silicon wafers have been trending toward larger sizes, with 12-inch wafers becoming the mainstream product for the current and foreseeable future.

According to reporters from the Star Daily, currently in the layout of 12-inch semiconductor polishing wafers, apart from Youyan Silicon, there are also a few enterprises like National Silicon Industry Group, Zhonghuan Co., and Xi'an Yiswei, which have achieved mass production capacity for 12-inch semiconductor silicon wafers through self-built production lines.

However, unlike the latter few, Youyan Silicon has chosen to make external investments to increase its capacity for the 12-inch semiconductor polishing wafer production line.

When discussing investment plans for the 12-inch wafer project, relevant personnel from the company stated that the project requires significant investment, has high technical difficulty, and has a long market validation cycle, resulting in a long period for achieving good economic returns. By investing in ShanDong Youyan Aisi and laying out the 12-inch wafer industry, it is possible to accelerate the development speed and catch up with domestic and foreign peers with less investment, while also securing more time for the 12-inch project to develop technology and products, laying a good foundation for future development.

In terms of performance, from 2023 to September 2024, ShanDong Youyan Aisi's net income was -0.105 billion yuan and -61.4452 million yuan, and it has not yet turned a profit.

Youyan Silicon stated that the main reason is the heavy investment intensity in the 12-inch wafer production line, second only to wafer plants. Currently, ShanDong Youyan Aisi has achieved a production capacity of 0.1 million wafers per month; however, fixed asset depreciation is high, and the company's products are still in the validation stage, so product promotion and capacity enhancement will take some time.

"There are relatively high certification barriers for downstream customers of 12-inch wafers. As a significant market participant for 12-inch wafer products, certification involves multiple phases like supplier admission, test wafer certification, and formal wafer certification before mass production orders can be secured. The certification cycle generally lasts around two years," further added the representatives from Youyan Silicon.

The company's Secretary office personnel stated to the Star Daily reporter that, with the continuous release of production capacity of the subsidiary ShanDong Youyan Aisi, the company does not rule out the possibility of acquiring it through methods such as increasing capital and share expansion.

Relevant personnel of the company stated that the construction of ShanDong Youyan Aisi is progressing as planned, and after that, capacity expansion will be continuously carried out based on market development, ultimately achieving the capacity target of 0.3 million pieces per month.

While deploying new capacity for 12-inch polished wafers, Youyan Silicon has also been continuously expanding its 8-inch silicon wafer capacity and improving product structure in recent years.

The company’s Secretary office personnel stated that the current utilization rate of the company’s 8-inch polished wafers is quite good, and market demand is still being released. Furthermore, the Secretary office personnel indicated that the company’s revenue from 8-inch polished wafer products comes from the domestic market. Currently, as the demand in the domestic market stabilizes with car-grade and electronic consumer products, the company is expected to show a steady increase in shipments throughout 2024.

Additionally, regarding the progress of the 8-inch silicon wafer fundraising project, the company is proceeding with the project for the expansion of 8-inch silicon wafers for integrated circuits as planned, with production expected to be completed by the end of 2024, allowing for capacity release in stages in 2025, with an estimated total capacity of around 0.25 million pieces per month in 2025.

Specifically, in the layout of differentiated product production, at this stage, the company has rapidly developed 8-inch MCZ, low micro-defect, heavily doped ultra-low resistivity, ultra-low oxygen and other specialized silicon wafer products, and completed the R&D of 8-inch zone melt silicon materials, which will contribute to the company's performance release in 2025, creating new profit growth points.

Looking ahead, according to SEMI's forecast, the global demand for 8-inch silicon wafers will reach 7 million pieces per month, while the demand for 12-inch silicon wafers will reach 9.2 million pieces per month by 2025.

Regarding the company's focus on planning the capacity of 8-inch and 12-inch silicon wafers, the aforementioned company’s Secretary office personnel stated that, although the global 12-inch silicon wafer shipments have maintained a high volume over the past few years with the highest market share, it is noted that while the shipment of 12-inch silicon wafers is growing, the shipment of 8-inch silicon wafers is also maintaining a considerable growth rate, and the market demand is still there. In the short term, there is no situation where 12-inch silicon wafers will replace 8-inch silicon wafers.