The subsidiary of Yunnan germanium industry is invested in Hubble by China and is currently undergoing product adjustment and upgrading.

SMM Network News: Yunnan germanium industry (002428.SZ) disclosed that the holding subsidiary Xinyao Semiconductor obtained the 30 million yuan capital increase invested by Huawei's Hubble, and the listed company gave up the priority of this capital increase. Dong Mi of Yunnan germanium industry told reporters that the production capacity release of Xinyao Semiconductor 2-inch indium phosphide single wafer project will not be too large, and the company's production line plans to upgrade to 4 inches.

"the original production line is 2 inches, but now it is upgrading to 4 inches, so now the production capacity will not be released too much." Dong Mi of Yunnan germanium industry also revealed that arsenic hua gallium also began to adjust to 6 inches, while Xinyao Semiconductor's annual production of 50, 000 pieces of 2-inch indium phosphide single wafer is still in the stage of trial production.

It is understood that Xinyao Semiconductor will provide arsenic hua gallium and indium phosphide substrates to Hubble investment related parties in the future, and guarantee the supply, while the other side will provide feedback on technology and product verification for Xinyao Semiconductor in combination with the practical application of related products.

Yunnan germanium industry said that there are professional semiconductor chip manufacturers among the related parties of Hubble investment, and the main purpose of introducing Hubble investment is to strengthen communication and cooperation with downstream manufacturers. it is conducive to the improvement of the quality of Xinyao semiconductor products and promote its market development. Upon completion of the capital increase, Hubble Investment has the right to appoint a director to the company.

According to the announcement, after the capital increase is completed, the shareholding of listed companies will be diluted from 70% to 53.26%, and Hubble Investment's shareholding will be 23.91%.

Xinyao Semiconductor is mainly engaged in the R & D and production of semiconductor material arsenic hua gallium and indium phosphide substrate (single wafer). In August 2019, its trial production of 6 inch arsenic hua gallium single wafer and 4 inch indium phosphide single wafer has been verified by Huawei Hayes.

In December of the same year, Yunnan germanium industry announced that it would expand the annual production line of 150000 pieces of 4-inch indium phosphide wafers on the basis of the original production line of 50, 000 2-inch indium phosphide wafers. "this expansion project is not rumored in the market to match Huawei Hayes. Of course, if Huawei Hayes needs it, it can also supply it." Dong explained.

The reporter noted that in 2019, Yunnan germanium industry lost 59.145 million yuan. Of its 11 major subsidiaries, only Xinyao Semiconductor contributed profits, making a profit of 12.1393 million yuan that year. In the first half of this year, the overall net profit of Yunnan germanium industry was only 1.7334 million yuan, while Xinyao Semiconductor achieved a net profit of 4.2937 million yuan, which is still the highest profit among the main subsidiaries of Yunnan germanium industry.

According to the semi-annual report, Yunnan germanium industry produced 103700 pieces of non-germanium semiconductor material grade products (equivalent to 4 inches) in the first half of the year, and the revenue of semiconductor materials was 32.3367 million yuan, most of which was contributed by Xinyao Semiconductor, which earned 32.3977 million yuan in the first half of the year.

However, Xinyao's revenue and net profit fell 22.2 per cent and 67.32 per cent respectively in the first half of this year compared with the same period a year earlier. "it is mainly due to the adjustment of the product structure. In addition to the size, the product category of the same size is also very complex. Take arsenic hua gallium as an example, if the proportion of LED is high, then its gross profit margin will come down." The secretary of Yunnan germanium industry told the Financial Associated Press.

It is worth mentioning that in September last year, another shareholder of Xinyao Semiconductor transferred its 15.71% to foreign countries. Yunnan germanium industry also gave up the right of preemption, and natural person Zhu Ronghui obtained the stake. Yunnan germanium industry explained that it is to introduce a management and operation team while maintaining a controlling position.