ZTE Corporation acquired 24% of ZTE Microelectronics' equity held by the Big Fund for a total of RMB 3.315 billion

On September 27, ZTE Corporation announced that after friendly negotiations between the National Integrated Circuit Industry Investment Fund Co., Ltd. (hereinafter referred to as the "IC Industry Fund") and the company, the company acquired the 24% equity interest in the company's holding subsidiary Shenzhen ZTE Microelectronics Technology Co., Ltd. (hereinafter referred to as "Microelectronics") held by the IC Industry Fund through its wholly-owned subsidiary Shenzhen Renxing Technology Co., Ltd. (hereinafter referred to as "Renxing Technology") (hereinafter referred to as the "Acquisition"). The acquisition is subject to approval by the shareholders' meeting.

The valuation of all shareholders' equity value of Microelectronics is RMB 1,353,022.79 million, and the aforementioned valuation price has completed the assessment and filing procedures with the Ministry of Finance. The transfer price of the 24% equity of Microelectronics transferred by the Integrated Circuit Industry Fund to Renxing Technology was finally determined to be RMB 331,528.7671 million.

It is understood that Shenzhen ZTE Microelectronics Technology Co., Ltd. was established on November 28, 2003 with a registered capital of RMB 131,578,947. Its main business is the design, production and sales of integrated circuits (excluding exclusive, controlled and monopolized goods), and it operates import and export businesses.

The shareholders of Microelectronics include ZTE, Integrated Circuit Industry Fund and Shenzhen Saijiaxun Investment Development Enterprise (Limited Partnership), among which ZTE holds 68.4% of the shares; Integrated Circuit Industry Investment Fund holds 24%; and Saijiaxun holds 7.6%.

The 24% equity interest in Microelectronics held by the Integrated Circuit Industry Fund originated from the capital increase of the latter five years ago. On November 23, 2015, ZTE and the Integrated Circuit Industry Fund signed the Capital Increase Agreement and the Shareholders Agreement. The Integrated Circuit Industry Fund increased the capital of Microelectronics with 2.4 billion yuan in cash. After the capital increase, the Integrated Circuit Industry Fund held a 24% equity interest in Microelectronics.

In 2019, Microelectronics achieved revenue of 5 billion yuan and net profit of 195.7 million yuan; in the first quarter of 2020, Microelectronics achieved revenue of 988 million yuan and net profit of 29 million yuan.

Renxing Technology is a wholly-owned subsidiary of ZTE Corporation established on September 2, 2020 with a registered capital of RMB 10 million. Its business scope includes software research and development, sales; investment in industrial enterprises; venture capital business; project investment, etc.