Youken Silicon (688432) announced on the evening of March 14 that it intends to acquire 70% of the shares of DGTechnologies Co., Ltd. (hereinafter referred to as "DGT") held by RS Technologies Co., Ltd. (hereinafter referred to as "RST") through cash payment with its own funds. After the completion of the acquisition, the company will hold 70% of the equity of DGT, RST will continue to hold 30% of the equity of DGT, and DGT will become a holding subsidiary of the company and be included in the consolidated scope of the company's consolidated financial statements. Referring to the evaluation results and after negotiation between the parties to the transaction, the price of the acquisition target equity was determined to be 1.191 billion yen, equivalent to 58.4697 million yuan.

RST is the controlling shareholder of the company and is an affiliated legal person, and this acquisition constitutes a related party transaction and does not constitute a material asset restructuring. As of the end of September 2024, DGT has a capital of 100 million yen and 133 full-time employees, and its main business is the R&D, production and sales of components for etching equipment (including silicon parts and quartz parts), including silicon electrodes, silicon rings, quartz rings, etc., with a high concentration of downstream products, and has two production bases located in Kamisu City, Ibaraki Prefecture and Kurihara City, Miyagi Prefecture, Japan.

DGT's proprietary technology is a precision machining technology for high-quality quartz and silicon parts for etching materials, which uses advanced machining equipment and technology to carry out high-precision cutting, grinding, MC processing, corrosion, polishing, cleaning, packaging and other operations on quartz and silicon materials to ensure the dimensional accuracy and surface quality of quartz and silicon parts.

According to reports, from 2014 to 2016, the prosperity of the international semiconductor industry declined, the global semiconductor industry was in a downturn, the development prospects of the semiconductor silicon material industry were unclear, the assets of international enterprises in the same industry were frequently integrated, and some well-known semiconductor enterprises were bankrupt and reorganized. In June 2016, the predecessor of DGT was ordered by the court to undergo bankruptcy reorganization. When RST acquired DGT in 2019, DGT had just experienced bankruptcy, its reputation declined, and its major customers and suppliers had broken off cooperation, which made it extremely difficult for DGT to carry out its business at that time.

After RST's acquisition of DGT, after 6 years of careful operation and development, DGT's business situation has changed significantly. In terms of customers, DGT has successfully passed the "Pure Manufacturer" certification of major semiconductor equipment manufacturers, and the customer has become DGT's largest customer.

From

January to September 2024, DGT's net profit was negative, mainly due to the lack of operating rate due to the macroeconomic impact in the first quarter, and from the second quarter, with the recovery of the semiconductor downstream market and the growth of the storage market, DGT's profitability has gradually improved, and the net profit in the fourth quarter of 2024 was about 14.4279 million yen.

As one of the earliest units engaged in the development of semiconductor silicon materials in China, the company has accumulated rich experience in the research and development and manufacturing of semiconductor silicon materials. It is the first in China to realize the industrialization of 6-inch and 8-inch silicon wafers and the technological breakthrough of 12-inch silicon wafers, and the first to realize the industrialization of silicon materials for integrated circuit etching equipment. The company has a wide range of silicon material products, and has the R&D and production capacity of 6-8 inch semiconductor silicon polishing wafers, silicon materials for etching equipment, semiconductor zone molten silicon single crystal and silicon wafers.

Youyan Silicon said that this transaction is conducive to the extension of the industrial chain of listed companies, enhance the ability of listed companies to manufacture terminal products, and complete the downstream links of the industrial chain. Through this transaction, the listed company can make up for its technical shortcomings in the processing of terminal products, enhance its competitiveness and responsiveness to customers. This transaction will enable the listed company to gain direct end users, enhance the global visibility of the product brand, expand overseas markets, and help the listed company achieve its strategic goals.

In addition, due to the restrictions of competition in the same industry, the company is currently unable to carry out the production and sales of silicon component products, and the completion of this acquisition will open a channel for the downstream extension of the company, and at the same time, DGT has successfully obtained the qualified supplier certification of important equipment manufacturers, which can provide sales channels for overseas manufacturers and expand the domestic market. After the merger of the two parties, GRAN Silicon will form a synergistic advantage in the industrial chain from silicon materials for etching equipment to silicon components, providing a solid guarantee for in-depth participation in industrial competition in the future.