On October 23, Huacan Optoelectronics announced its strategic plan to leverage the existing technological and production advantages of its wholly-owned subsidiary, Huacan Optoelectronics (Suzhou) Co., Ltd. The company aims to enhance scale efficiency, reduce production costs, and improve material supply reliability, ultimately safeguarding the interests of its shareholders. As part of this initiative, Huacan Optoelectronics is set to launch the "LED Epitaxial Wafer and Chip Four-Phase Project" in Zhangjiagang City, Jiangsu Province.
The first phase of the fourth project involves constructing various supporting facilities, including an epitaxial plant, a chip plant, a power plant, and an ammonia supply station. The total construction area will reach 116,118.72 square meters. Additionally, the company plans to renovate the existing 1# epitaxial plant and 2# chip plant, with an estimated renovation area of 6,500 square meters. New production equipment will also be purchased. Once completed, this phase is expected to produce an annual capacity of 9 million LED epitaxial wafers (2-inch film, for internal use) and LED chips of various specifications.
The total investment for this phase is approximately 2.05 billion yuan, which includes 290.273 million yuan in construction investment, 3.25022 million yuan in working capital, and 8.2321 million yuan in construction period interest. Furthermore, the Suzhou Subsidiary is expected to benefit from local government subsidies for fixed asset investments, up to 400 million yuan, as well as research and development funding and loan interest subsidies totaling no more than 300 million yuan between 2017 and 2021.
Huacan Optoelectronics stated that the project aligns with its long-term growth strategy. It will not only capitalize on the Suzhou Subsidiary's current strengths but also support the company’s broader expansion. By improving economies of scale, the company aims to achieve greater cost efficiency and ensure a stable supply chain.
In addition to the project announcement, Huacan Optoelectronics also revealed plans to inject an additional 500 million yuan in capital into its Suzhou Subsidiary. After the capital increase, the subsidiary’s registered capital will reach 1.1 billion yuan, with Huacan Optoelectronics retaining full ownership.
The Suzhou Subsidiary focuses on the design, manufacturing, and sale of semiconductor materials and devices, electronic materials, and semiconductor lighting equipment. It also engages in import and export activities, subject to national regulations.
According to the recent financial reports, the subsidiary has shown strong performance, and the capital injection is intended to strengthen its financial position. This move supports the ongoing construction of the LED epitaxial wafer and chip four-phase project and aligns with the company’s long-term development goals.
As the project progresses, it is expected to significantly boost Huacan Optoelectronics’ market presence and competitive edge in the global LED industry.
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