Zhaochi Semiconductor's current production and sales have reached 1.1 million 4-inch wafers per month

Zhaochi Shares (002429) released an investor relations activity record form on July 25. The company accepted surveys from 37 institutions on July 24, 2024. The types of institutions are insurance companies, others, fund companies, securities companies, and sunshine private equity institutions. Introduction to the main content of investor relations activities:

Question: (1) What is the reason why Zhaochi Semiconductor continues to maintain its leadership

Answer: Between 2017 and 2018, the LED chip industry slowed down in terms of technology upgrades and equipment iterations. The industry began to enter the era of mass production and mass manufacturing. At the same time, as small-pitch products gradually opened up market space, the market demand for LED chips continued to expand. Against this background, the company relied on its deep technology and experience in the field of intelligent manufacturing to establish Zhaochi Semiconductor in 2017, choosing an appropriate time to enter the LED chip industry. chip industry, and integrates the company's intelligent manufacturing experience into chip R&D and production. With the continuous improvement of production capacity, Zhaochi Semiconductor's current production and sales have reached 1.1 million 4-inch wafers per month, consolidating its leading position in the segmented industry. At the same time, since 2021, the company has been committed to optimizing the product structure and gradually shifting the product system from the original ordinary lighting chips to higher value-added product areas. Up to now, Zhaochi Semiconductor's MiniRGB chip shipments have ranked first in the industry, and it has successfully transformed into a chip manufacturer that mainly sells high value-added chips such as high-efficiency lighting, backlighting, and display. It continues to improve its product structure and enhance the overall value of its chips. Zhaochi Semiconductor has achieved large-scale operations by integrating the upstream core industry chain technologies of LED chips, forming a full-process independent manufacturing capability of "sapphire flat wafer→patterned substrate PSS→LED epitaxial wafer→LED chip". It maximizes the integration and improvement of process and technical capabilities while significantly reducing the cost of LED chips.

Question: (2) Zhaochi Semiconductor’s production capacity structure What is the current progress in terms of adjustments? Ordinary LED lighting chips in the industry are basically at a loss. When can this situation be improved?

Answer: From an application perspective, the demand for LED chips varies depending on the application scenario. Among them, the lighting field occupies a dominant position, accounting for about 60-70% of the demand, and backlight and direct display each account for 15-20%. Overall, the current general lighting market is weak and prices are low. In the future, as the market supply and demand structure is optimized, the industry is expected to increase the profitability of a single product by adjusting prices, and gradually shift production capacity to high value-added chips to respond to market changes. For Zhaochi Semiconductor, the company's production capacity ratio of backlight chips and direct display chips is slightly lower than the industry average. Based on this, the company is actively adjusting its strategy, increasing the investment in high-efficiency lighting, backlight, display and other products, and continuing to optimize its product structure. Among them, Zhaochi Semiconductor’s MiniRGB chip shipments have reached the largest level in the industry.

Question: ( 3) Will additional equipment costs be added during the adjustment of Zhaochi Semiconductor chip production capacity? In what ways will the company reduce costs in the future?

Answer: The equipment purchased by Zhaochi Semiconductor is in a leading position in the industry and can flexibly adapt to the production needs of new products when adjusting production capacity, greatly reducing the additional cost investment in new equipment. On the path of cost reduction, Zhaochi Semiconductor continues to explore cost optimization solutions by improving its technical level and improving its management structure.

Question: (4) What are the current main application scenarios of COB products? What is the company's production capacity? What is the production capacity of different point pitch products?

Answer: Zhaochi Crystal Display's COB product line is extensive, covering P0.62-1.87, including eight series, achieving full coverage of application scenarios from C-end to B-end to G-end. In terms of production capacity, the company’s current COB monthly production capacity reaches 1,600 0 level. In the future, we will rationally plan the pace of production capacity improvement based on market demand. Currently, P1.25 is the company's main product, accounting for approximately 50%-60% of the total production capacity.

Question: (5) What is the current penetration rate of COB products?

Answer: The smaller the dot spacing, the more obvious the competitive advantage of COB. At present, in the market of P1.2 and below, the penetration rate of COB exceeds 50%, and the status of mainstream technology has been established; the market above P1.5 was mainly dominated by SMD in the past, but since 2024, the penetration rate of COB technology has gradually increased, and a competitive pattern with SMD technology has now been formed.

Question: (6) What achievements has the company's COB products achieved in reducing costs?

Answer: With its advantages in design innovation, Zhaochi Crystal Display has The advantages of large-scale high-end manufacturing and the synergistic advantages of vertical integration of the entire industry chain have successfully reduced the manufacturing costs, labor costs, and R&D costs of COB products. Especially in 2023, the price of main point-pitch products will drop by half to two-thirds year-on-year. In 2024, with the further reduction of raw material costs, the continued promotion of technological innovation, and the improvement of equipment capacity utilization, the cost of COB products will continue to decline.

Question: (7) The company adopts a vertically integrated layout of the entire industry chain. What are the advantages of this layout?

Answer: The company's entire LED industry chain has formed an organic whole that is interlocked and strategically coordinated in all links. Especially when Zhaochi Semiconductor and Zhaochi Crystal Display are located in the same industrial park, the advantages of this layout are particularly significant. By reducing communication costs, product transportation costs, technology research and development costs, and ensuring that product research and development and production goals are highly consistent, it can not only optimize the operating efficiency within the group, but also greatly improve the collective The overall competitiveness of the group.