Wanye Enterprises takes multiple measures to continuously expand the field of integrated circuit equipment and materials

On April 16, Wanye Enterprise released its 2020 annual report. The company achieved revenue of 931 million yuan and a net profit attributable to shareholders of the listed company of 315 million yuan; after deducting non-recurring gains and losses, the net profit attributable to shareholders of the listed company was 252 million yuan.

In 2020, Wanye Enterprise continued to deepen its transformation towards integrated circuit equipment materials. The company's holding subsidiary Kaishitong continued to expand its R&D investment, with R&D expenses increasing by 671.05% year-on-year. The low-energy, large-beam ion implanter it developed has entered the mainstream domestic 12-inch wafer manufacturing plant and is completing verification, and has received multiple orders for integrated circuit ion implanters; at the same time, Wanye Enterprise extended its layout of the integrated circuit equipment industry chain and took the lead in acquiring 100% of the shares of Compart Systems, a global leading supplier of precision components and flow control solutions for gas delivery systems required for integrated circuit equipment. After the investment was completed during the reporting period, Wanye Enterprise indirectly became the largest shareholder of Compart Systems.

Ion implantation products are expected to complete acceptance in the second quarter, and the transformation will enter the harvest period

Wanye Enterprise seized the opportunity of the increase in rigid demand for domestic key equipment, accelerated the commercialization of ion implantation machine products, and achieved a major breakthrough in commercial orders.

In September 2020, Shanghai Kaishitong's integrated circuit ion implanter products have been moved into the customer factory of 12-inch mainstream integrated circuit wafer manufacturing and entered the production line verification stage. The first equipment is expected to complete the client's factory verification in the second quarter of 2021. In December 2020, Beijing Kaishitong and Xincheng Technology (Shaoxing) Co., Ltd. signed three 12-inch integrated circuit equipment orders. Production plans are currently being formulated and actively promoted based on delivery targets. As of the end of the reporting period, Beijing Kaishitong had received a total of four integrated circuit ion implanter equipment orders, ushering in a major breakthrough in commercial customers and multi-model orders. On the other hand, Shanghai Kaishitong's beyond 7-nanometer ion implantation platform has passed customer verification and acceptance, the process manufacturing level has gradually improved, and business volume is imminent.

It is worth noting that the Kaishitong team under Wanye Enterprise has increased its product research and development efforts year by year, and has continuously accelerated the innovative development of integrated circuit ion implanters. In August 2020, Shanghai Kaishitong's "Large Beam Ion Implant Equipment and Process Research and Development" project won the first prize of Beijing Science and Technology Progress. In September 2020, the "Integrated Circuit Equipment RF Power System Research and Verification" project undertaken by Shanghai Kaishitong was included in the 2020 Shanghai "Science and Technology Innovation Action Plan" integrated circuit technology support special list. In October 2020, Beijing Kaishitong won the iStellar-500 SEMI certification certificate.

Multi-pronged approach, actively deploying the integrated circuit industry chain

In recent years, Wanye Enterprise has insisted on industrial upgrading and actively laid out the integrated circuit industry chain. Through the "external expansion and mergers and acquisitions + industrial integration" approach, it has continued to steadily promote the company's rapid transformation into the integrated circuit industry equipment and materials field.

During the reporting period, Wanye Enterprise made a strategic investment in Anhui Fulide, a leader in the semiconductor equipment precision cleaning industry, which has built unique competitive advantages in both products and markets. Its controlling shareholder is Shanghai Shenhe Thermomagnetic Electronics Co., Ltd. ("Shenhe Thermo"), which is a wholly-owned subsidiary of FerroTec ("Ferro Group"), a Japanese listed company. Ferro Group is headquartered in Japan and is an internationally renowned supplier of semiconductor products and solutions. The company has a rich product line and is a global leader in the sub-sectors of semiconductor equipment sealing components and semiconductor equipment ceramic devices. Wanye Enterprise's strategic investment in Fulide is to extend the layout of the integrated circuit equipment industry chain downward, and will also form synergies with multiple existing semiconductor industry businesses.

In December 2020, Wanye Enterprise led a domestic and foreign consortium to complete the acquisition of Compart Systems, a global leader in precision components and flow control solutions for gas delivery systems required by integrated circuit equipment. The base price of the acquisition transaction was US$398 million, making it the largest cross-border M&A transaction by Chinese companies in this field in recent years. Its transaction size ranked ninth in the 2020 Global Semiconductor M&A Top 10 Ranking. After the investment was completed during the reporting period, Wanye Enterprise indirectly became the largest shareholder of Compart Systems.

It is reported that due to the particularity of chemical gas products, the oxidation/diffusion, etching and deposition processes in semiconductor processes require precise gas delivery systems to ensure process purity and improve safety. Compart Systems is one of the most critical suppliers of gas delivery systems in integrated circuit equipment. Its main products include BTP (Built To Print) components, assemblies, seals, gas rod assemblies, gas flow controllers (MFCs), welding parts, etc. The products are used in the precise gas delivery systems required for oxidation/diffusion, etching and deposition equipment in the integrated circuit manufacturing process; at the same time, it is one of the few companies in the world that can complete all aspects of precision processing of components in this field and provide high-end gas flow controller (MFC) assembly for semiconductor customers.

Compart Systems also provides products including high-precision metal processing parts, mass flow controllers, control valve assemblies, etc. to customers in the semiconductor, industrial, aerospace, oil and gas fields. Its customer base covers world-renowned integrated circuit equipment companies and leading industrial enterprises.

According to relevant reports, China's local integrated circuit equipment is currently composed of thousands of components, with an average localization rate of 10%-30%, and almost zero core key components. Wanye Enterprise's acquisition of Compart Systems will help increase the localization rate of core components and parts in areas such as gas delivery systems and high-precision flow control required for integrated circuit equipment, filling the gaps in the local supply chain.

Strengthening responsibility and sharing development results

Kaishitong attaches great importance to the maintenance and expansion of professional teams. During the reporting period, it has taken a number of positive measures to deeply bind the interests of employees, promote the company and employees to form a community of interests, and empower the team to achieve sustainable development. During the reporting period, Kaishitong issued additional shares to the founding team and core employees, and successively signed share subscription agreements to give full play to the enthusiasm and innovation of the core team, providing a long-term driving force for the company's high-quality development. This is conducive to further enhancing team cohesion and accelerating the development of integrated circuit equipment commercialization.

At the same time, Wanye Enterprise actively responded to the call of the regulators to guide listed companies to pay cash dividends, fulfilled the responsibilities of listed companies, and protected the rights and interests of shareholders. According to the 2020 profit distribution plan, the company plans to pay a cash dividend of RMB 1.05 per 10 shares to all shareholders (except for the repurchase special securities account of Shanghai Wanye Enterprise Co., Ltd.), accounting for 30.33% of the net profit attributable to shareholders of listed companies in the consolidated financial statements.

According to statistics from Kaiyuan Securities, the rise of domestic wafer manufacturing has brought about capacity expansion, and the domestic integrated circuit industry has ushered in an opportunity for accelerated growth. According to SEMI data, 62 semiconductor wafer fabs are planned to be put into production worldwide between 2017 and 2020, of which 26 are located in mainland China, accounting for 42% of the global total. According to SEMI data, as of 2019, there were 86 wafer fabs in mainland China. SEMI expects China's wafer production capacity to increase from 2.3 million pieces per month in 2015 to 4 million pieces per month in 2020, with a compound annual growth rate of 12% from 2015 to 2020. With the release of the capacity of a large number of newly built wafer fabs and the improvement of the capacity utilization rate of domestic mainstream foundries, the capacity expansion of wafer fabs is bound to extend to the upstream and downstream industrial chains, which will bring more new demand for semiconductor equipment.

从趋势来看，国产替代成为国内集成电路产业发展主线。国际形势的变化，驱使龙头整机企业加速国产化供应链重塑。未来国内厂商在先进制程上的不断突破，将会迎来半导体设备需求的显著提升，更多国内设备公司将被纳入采购体系。在国产替代的历史性机遇下，国内集成电路全产业链均将受益，“十四五”期间国内集成电路行业有望开创新的局面。

Wanye Enterprise stated that it will firmly drive technological upgrades with high R&D investment, continue to focus on domestic and foreign markets, rely on endogenous upgrades through independent research and development, and at the same time promote the process of external development, integrate top R&D forces and advantageous resources, accelerate the completion of the company's strategic layout, and strive to continuously expand and lead the field of integrated circuit equipment and materials, thereby further enhancing its influence and recognition in the capital market.