Issuance of Shares and Unlisted Warrants to GCL Technology Chairman Zhu Gongshan was Formally Approved at HG Semiconductor’s Extraordinary General Meeting

HONG KONG, Dec 13, 2022 – (ACN Newswire) – HG Semiconductor Limited (“HG Semiconductor”, together with its subsidiaries, “the Group”; stock code: 6908. HK) announced that the resolution of the extraordinary general meeting was duly passed in relation to the investment agreement dated on 4 August 2022 (the “Investment Agreement”), which the Group entered into with Mr. Zhu Gongshan (“Mr. Zhu”), the Founder, Chairman and Executive Director of GCL Technology Holdings Limited (Stock code: 3800.HK; “GCL”), signifying that Mr. Zhu has officially become a major shareholder of the Group.

Pursuant to the Investment Agreement, the Group has agreed to allot and 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. The subscription shares and warrant shares shall be subject to a lock-up period of 18 months commencing on the date of issuance during which cannot be sold or transferred.

The subscription is a testament to Mr. Zhu’s confidence in the prospects of HG Semiconductor. In addition to becoming a major strategic shareholder of the Group, HG Semiconductor entered into a strategic cooperation framework agreement earlier on 7 September 2022 with Golden Concord Group Limited (“Golden Concord Group”), a company ultimately held under a discretionary trust with Mr. Zhu and his family members as beneficiaries, to commence a long-term strategic cooperation focusing on the application of third generation gallium nitride (“GaN”) power chips in the field of new energy. Leveraging its leading position in the new energy industry with comprehensive strategic layout, Golden Concord Group will assist HG Semiconductor to tap into the market of new energy supply chain, helping the Group develop its upstream and downstream businesses as well as becoming its close business partner.

The global chip business has been developing rapidly and the changing technology specifications and demand of different markets are the key factors for the Group to source suitable raw materials from different suppliers to cater for the Group’s production needs of GaN chips. With the rich resources and leading technology accumulated by Mr. Zhu and Golden Concord Group in the field of new energy over the years, it is believed that the silicon wafers supplied to the Group are of high quality given the crystal lattice of the entire solid of the silicon wafers is continuous, unbroken to its edges, and free of any grain boundaries. The supply of silicon wafers from Golden Concord Group will boost the Group’s confidence and ensure the stability and quality of its GaN business development. On the other hand, the third-generation semiconductors such as GaN and other broadband semiconductors are expected to be excellent materials for the energy conversion chain, as they can effectively reduce energy losses and improve energy conversion rates. The Group would supply the manufactured GaN chips to Golden Concord Group from its newly developed Xuzhou Factory with advanced technology, which are the fundamental components used in Golden Concord Group’s business in energy engineering, solar inverter and energy storage technology. Golden Concord Group, with its high-quality silicon wafers, may become one of the suppliers to the Group, while it will also become a potential customer of the Group’s GaN chips, meaning that both parties would complement each other.

As the digital economy accelerates, the semiconductor industry has gradually become a significant impetus for the global economy and socioeconomic development. The report of the 20th National Congress of the Communist Party of China (CPC) also clearly pointed out that it is necessary to uphold the country’s self-reliance and self-improvement in science and technology, opening up new areas and new arenas in development and accelerate China’s scientific and technological strength, and steadily fostering new growth drivers and new strengths. At the same time, in order to actively respond to the national policy guidelines, the Hong Kong government has recently established the Microelectronics Technology Consortium and is studying chip technology, promoting more high value-added and high technology manufacturing processes and production lines in Hong Kong; the third-generation semiconductors will therefore play a vital role in the development of technology and economic diversification.

To actively expand its third-generation semiconductor GaN business, HG Semiconductor has established a new factory earlier, with an area of over 7,000 square metres in Xuzhou (“Xuzhou Factory”), and has recently started manufacturing its own 6-inch GaN power device epitaxial wafers, representing a breakthrough and the first stage of the Group’s GaN chip business. The Group expects that full production of GaN chips will commence by early 2024. In addition, the Group’s research and development team will promote the GaN chips by implementing the GaN chips in the circuitry designed for different applications, to raise the customers’ loyalty, while at the same time, relevant GaN devices will also be launched to increase sales.

The management of HG Semiconductor is honored to introduce Mr. Zhu Gongshan as a major strategic shareholder of the Group. After nearly two years of business transformation, the Group has established its outstanding strengths in GaN power semiconductors and new energy industry. The Share Subscription and the Warrant Subscription represent a good opportunity for the Group to raise additional capital for its GaN business development, thereby accelerating its business development. Meanwhile, leveraging Mr. Zhu’s background as a major strategic shareholder of the Group, HG Semiconductor is expected to further accelerate the research and development (“R&D”) of GaN technology and application in the new energy field, and stride 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 R&D, manufacturing, testing, and sales. HG Semiconductor will continue to pursue its established business strategies to capture market opportunities, enhance stakeholder value and achieve long-term sustainable growth, with the aim of providing the best returns to shareholders.

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

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