During the exchange that day, Huacan Optoelectronics personnel discussed market and technology-related topics with Jiweiwang.
Strengthening the industrialization of Micro LED
Micro LED is a hot topic in the current display field. Foreign media reports that Apple is planning to equip its Apple Watch products with Micro as soon as 2024. For LED, Apple will abandon suppliers and manufacture Micro LED displays on its own.
Regarding this technology trend, Huacan Optoelectronics commented that Apple’s trends are basically in line with industry expectations, and that 2024 will be Micro LED products. It is a key node for large-scale applications, and the company has already laid out its plans for Micro LED technology research and development, which is at a relatively leading level in the country. "Because Micro is basically three-color, and Huacan, as a full-color supplier, we are still ahead in this field."
The company also revealed during a recent survey at the reception institution that it has been cooperating with South Korea's top backlight display terminal brands on the Micro LED chip side since 2017, and has deep accumulation in technology research and development. The company has carried out a long-term and comprehensive technology and product research and development layout around Micro LED, including Micro LED chips, pixel devices, micro-display screens, mass transfer, etc. Among them, Micro LED chip products have passed the verification of many leading companies in terms of wavelength uniformity, performance, yield, etc., and have been continuously supplied in small batches; Micro LED pixel devices will be available in October 2022. The screen will be lit up in May, and small-scale mass production is expected to begin in 2023; the micro-display screen used for AR near-eye display uses the industry's most advanced wafer integration process, and dynamic picture display on sample screens has also been realized. The company's mass transfer technology is jointly developed with equipment manufacturers, and the yield rate continues to improve and the progress is smooth.
In terms of industrialization, Huacan Optoelectronics’ recent application documents for issuing shares to specific targets to raise funds have also been accepted by the Shenzhen Stock Exchange. The company plans to use 1.75 billion yuan of the raised funds for the construction of Micro LED wafer manufacturing and packaging testing base projects in the Zhuhai factory. The construction period is expected to be 4 years. The project products are Micro LED wafers and pixel devices, which are mainly targeted at ultra-large and ultra-small size high-definition display scenarios. They are mainly used in application fields such as large-size commercial displays, AR/VR head-mounted display devices, and wearable devices. After the project is completed, it will have an annual output of Micro LED wafers of 5.8 The production capacity is 80,000 chip sets and 45,000.00kk Micro LED pixel devices.
It is worth mentioning that after the issuance to specific targets is completed, the controlling shareholder of Huacan Optoelectronics will be changed to BOE. BOE has also stated that it will assume the responsibility for Mini/Micro The MLED platform for the development of LED emerging display technologies is one of the four main fronts of the "1+4+N+ ecological chain" business structure. Through this integration with Huacan Optoelectronics, it can achieve synergy in the core links of the industry chain, and at the same time build a full industry chain layout of substrate, epitaxy, chip, packaging, and application, which can greatly strengthen the influence of the industry, help the company build a large ecosystem of Internet of Things innovation, and further strengthen the core capabilities of ecological construction.
Downstream demand affects performance in 2022
As a supplier of LED chips and advanced semiconductor solutions, Huacan Optoelectronics' current main products are LED chips and epitaxial wafer products, sapphire material products and GaN power electronic device products. Its LED chip products are widely used in consumer electronics such as televisions, computers, mobile phones, indoor and outdoor displays, car lights and various lighting, ultraviolet, infrared and other markets.
In 2022, affected by the epidemic and the global economic situation, in addition to the well-known weakness in the consumer electronics market, demand for LED terminals such as general lighting is also relatively sluggish.
The company recently released a performance forecast for 2022. It is expected that the net profit attributable to shareholders of listed companies for the whole year will be a loss of 69-99 million yuan, while the net profit for the same period in 2021 will be 93.6236 million yuan. Net profit after deducting non-recurring gains and losses was a loss of 390-420 million yuan.
The company analyzed the reason and believed that during the reporting period, due to multiple factors such as repeated epidemics, turbulent domestic and foreign economic environments, and shrinking consumer market demand, the sales of some products in the traditional LED field fell short of expectations. At the same time, market demand has weakened, LED chip prices have dropped, upstream raw materials have increased, and product gross profit margins have declined during the reporting period.
In addition, the amount of government subsidies received by the company will decrease in 2022. The impact of non-recurring profit and loss items such as government subsidies on the company's net profit throughout the year is expected to be approximately 329 million yuan, a decrease of approximately 300 million yuan compared with 2021.
In order to meet the needs of business development and under the premise of controllable risks, Huacan Optoelectronics plans to provide guarantees for the comprehensive credit financing of daily operating liquidity from financial institutions for wholly-owned subsidiaries Huacan Optoelectronics (Zhejiang) Co., Ltd., Huacan Optoelectronics (Suzhou) Co., Ltd. and Yunnan Blue Crystal Technology Co., Ltd. hiragino="" sans="" micro="" font-size:="" text-indent:=""> The proposal also disclosed that as of January 20, 2023, the total amount of guarantees of the company and its holding subsidiaries was RMB 5.35 billion (excluding this time), accounting for 83.23% of the company's most recent audited net assets; the actual total balance of guarantees (including guarantees for subsidiaries) was 2.830 billion yuan, accounting for 44.04% of the company's most recent audited net assets.
The board of directors of Huacan Optoelectronics believes that the guaranteed party this time is a wholly-owned subsidiary of the company, with good operating conditions and the ability to repay debts. The company can effectively control its operations, and the financial risks of the guarantee provided by the company are within the controllable range. Therefore, no counter-guarantee is provided for this guarantee, which will not have an adverse impact on the company's normal operations and business development, and will not harm the interests of the company and all shareholders.
In addition, the company and its subsidiaries plan to apply to the China Development Bank and other financial institutions for comprehensive credit for the company's daily operations in 2023, with a total credit limit of no more than RMB 5 billion.
ANNA