A recent foreign investment and related transaction of Aiko Solar has revealed the latest status of Lihao Semiconductor, where the former is planning to invest RMB 385 million to acquire 2.78% of the latter’s equity.
Lihao Semiconductor was established in April 2021, and has been favored by leading industrial capital businesses such as CHINT and JSG, as well as renowned investment institutions such as IDG Capital and Jolmo Capital. Lihao Semiconductor announced in September this year to have completed a Series B funding that is worth RMB 2.2 billion, with additional investment coming from multiple institutions, including IDG Capital and Jolmo Capital, which constitute a magnificent investment line-up.
Market Value Estimated at Nearly RMB 14 Billion
As indicated by a recent announcement of Aiko Solar, Zhejiang Aiko Solar Energy Technology, a subsidiary of Aiko Solar, plans to participate in the capital increment of Lihao Semiconductor through monetary contribution, and acquire 2.78% of the latter’s equity for RMB 385 million. Based on this calculation, Lihao Semiconductor’s market value is estimated at RMB 13.849 billion.
Huafa Group, through its investment platform, invested RMB 170 million in Aiko Solar alongside the acclaimed investment institution IDG Capital in 2017, which served as a key deployment in new energy for the group. Huafa started deploying in the upstream PV industry chain centered on Aiko Solar since 2021, and invested in Gokin Solar to refine its layout in wafers, before joining the equity participation on Lihao Semiconductor for the polysilicon segment in order to actuate guaranteed provision of upstream raw materials.
Lihao Semiconductor is primarily engaged in the process R&D, production and sales of semiconductor materials such as high-purity crystalline silicon, with high-purity polysilicon being its major product, and is one of the suppliers for Aiko Solar. The company has planned to invest a total of RMB 18 billion in establishing a 200K ton high-purity crystalline silicon project in three phases, with the first phase (50K tons) having started operation in 2022, and the second phase now under construction.
As indicated by Aiko Solar’s announcement, Lihao Semiconductor was sitting on a total asset of RMB 8.746 billion and a net asset of RMB 4.069 billion as of October 31st 2022, with RMB 845 million of attained operating income and RMB 492 million of net profit between January and October 2022.
Upstream and Downstream PV Sectors Join Forces
Why has high-purity crystalline silicon, an upstream segment of the PV industry chain, generated interests among investment institutions, and received funding from leading industrial capital businesses such as CHINT and JSG?
Aiko Solar’s capital increment on Lihao Semiconductor was more towards the consideration on the synergy of the industry chain. As a matter of fact, the relatively constrained provision of polysilicon, especially high-purity multi polysilicon, has prompted PV businesses to also strategically invest and advance in the upstream sector, aside from signing long-term orders with upstream businesses, in order to guarantee security and stability for the supply chain.
Tongwei announced in November 28th this year that its subsidiary Sichuan Yongxiang has come to an agreement with LONGi on the investment and construction of Yunnan Tongwei phase 2 and its corresponding partnership on top of the joint venture that is the Yunnan Tongwei phase 1 project of 50K tons high-purity crystalline silicon co-constructed by the latter two companies.
According to the agreement, the registered capital of the project company has been risen from RMB 1.6 billion to RMB 5.6 billion, with Yongxiang adding RMB 2.04 billion of extra capital, and LONGi contributing RMB 1.96 billion of additional capital. Upon the completion of capital and stock expansion, Yongxiang and LONGi will respectively hold 51% and 49% of the project company’s equity, and the project company will remain as a subsidiary of Yongxiang.