Silicon number shares to IPO was the target of the restructuring of Wansheng shares

Analogix (Suzhou) Semiconductor Co., Ltd. (hereinafter referred to as "Silicon Digital Co., Ltd."), which was unsuccessfully acquired by Wansheng Co., Ltd. (603010), an A-share listed company, is now independently breaking through the Science and Technology Innovation Board. According to the official website of the Shanghai Stock Exchange, the IPO of the Science and Technology Innovation Board of Silicon Digital Co., Ltd. recently disclosed the first round of inquiry responses. Looking back on the failed restructuring many years ago, some special connections between silicon number shares and Wansheng shares were also put in front of the stage. In the process of reorganization, Silicon Digital Co., Ltd. terminated the research and development of small screen AMOLED driver related projects (hereinafter referred to as "Project A"), and the project team was disbanded by Silicon Digital Co., Ltd., which was undertaken by Wansheng Co., Ltd., and a new company was established Sheng Microelectronics (Suzhou) Co., Ltd. (hereinafter referred to as "Sheng Microelectronics"), and the relevant issues involved in the above situation need to be further explained by Silicon Digital Co., Ltd.

It was unsuccessfully acquired by Wansheng shares

Silicon number shares once had a past with Wansheng shares.

According to the prospectus, Silicon Digital Co., Ltd. is a company that provides high-performance digital-analog hybrid chips, and has established the R&D and sales business of integrated circuit chips with display main control chips and high-speed intelligent interconnection chips as its main products, as well as providing IP licensing and chip design services for internationally renowned semiconductor manufacturers.

As early as the end of 2016, the silicon number of shares had been favored by Wansheng shares, at that time, Wansheng shares planned to issue shares at a price of 3.75 billion yuan to purchase Jiaxing Haida, integrated circuit fund and other 7 shareholders held 100% of the shares of the core of the company, the core of the acquisition of the predecessor of the silicon number of shares of the company and the acquisition of the main body of the company.

Since then, Wansheng has started a long road of restructuring, during which the transaction amount has been reduced to 3 billion yuan. In March 2019, after more than two years of planning, the restructuring failed.

Xu Xiaoheng, an investment and financing expert, said that if the restructuring lasts for a long time, the market situation and the target situation may change greatly, which will have an important impact on the restructuring matters.

In response to the above-mentioned restructuring matters, in the first round of inquiry, the Shanghai Stock Exchange required Silicon Digital Shares to explain the specific reasons for the termination of the restructuring with Wansheng shares, the performance of relevant decision-making procedures, whether the relevant influencing factors have been eliminated, the commercial purpose and main considerations of the company's original actual controller to sell control, whether there are significant differences between the valuation of the previous transaction plan and other information disclosure materials and the application materials, and whether the company does not meet the conditions for issuance and listing.

In addition, after the termination of the restructuring, in August 2019, Wansheng Co., Ltd. and Jiaxing Haid signed the "Equity Transfer Agreement", agreeing to transfer no more than 2.18% of the equity of Jiaxing Haid's silicon number shares held by Jiaxing Haid with its own funds of 100 million yuan, and pay the equity transfer price in September 2019, and it was not until January 2021 that the above-mentioned equity transfer completed the industrial and commercial change registration.

This situation has also attracted the attention of the Shanghai Stock Exchange, which asked Silicon Digital to explain the reasonableness of the transfer of Wansheng shares in 2019, the company's industrial and commercial change registration in January 2021, and whether there is a special interest arrangement.

The divestiture project was undertaken by Wansheng Co., Ltd

It is worth noting that in the process of restructuring, Silicon Digital Co., Ltd. terminated Project A and dismissed the project team, and this project was undertaken by investors such as Wansheng Co., Ltd., and a new company was established Sheng Micro.

It is understood that since 2016, Silicon Digital Co., Ltd. has tried to develop other product lines, including the research and development of project A with mobile phones as the main application. In 2018, Silicon Digital Co., Ltd. decided to dissolve the A project team and divest the A project.

According to the announcement disclosed by Wansheng on September 10, 2018, Wansheng and Lin Yuefei, Li Fang, Li Yuchong, Xiang Xuesong and Qin Liang signed the "Joint Venture Agreement" on September 9, 2018, to jointly invest in the establishment of Sheng Micro in Suzhou, of which the proportion of shares contributed by Wansheng is 59%. It is worth mentioning that 38 former employees of Silicon Digital Co., Ltd. joined Sheng Micro after leaving the company, including 35 A project team members, 2 managers and 1 engineer. Subsequently, in 2020, Wansheng Co., Ltd. transferred 59% of the equity held by Shengwei Co., Ltd. to Gao Xianguo, the actual controller of Wansheng Co., Ltd.

In response to the reasons for the divestment of Project A, Silicon Digital Co., Ltd. said that when the A project was divested, affected by internal and external factors, the company's book working capital was tight, and because AMOLED in the field of medium screen had not yet generated enough market demand, and Project A failed to achieve the success of tape-out, it is expected that it will continue to increase cash outflow in a few years, and it will not be able to bring profits to the limited number of silicon at that time. In order to reduce expenses and focus on the development of the main business, the management of Silicon Digital Co., Ltd. decided to disband the A project team. In view of the fact that some funders are willing to accept the proposed project A and pay the costs that the company has invested, considering that this arrangement can effectively improve the company's cash flow position and avoid the severance compensation that needs to be paid to employees due to the dissolution of the project A team, in the second half of 2018, Sishu Co., Ltd. formally decided to divest Project A.

In response to this situation, the Shanghai Stock Exchange requires Silicon Digital Co., Ltd. to explain whether the relevant personnel of Sheng Micro Co., Ltd. undertake, equity transfer and Wansheng Co., Ltd.'s acquisition (and termination) of Silicon Digital Co., Ltd. are a package arrangement, and whether there is a special interest agreement.

There are related party transactions with Ascend Micro

In addition, during the reporting period, Silicon Digital Co., Ltd. also had related party transactions with Sheng Micro.

From 2020 to 2022, the accounts receivable of Silicon Digital Co., Ltd. to Sheng Micro were 7.1446 million yuan, 7.6145 million yuan and 357,900 yuan respectively, which were generated by IP authorization to Sheng Micro, and other receivables were 234,300 yuan, 165,800 yuan and 0 respectively, which were generated for its disbursement expenses.

Specifically, on December 20, 2018, Silicon Digital America, a subsidiary of Silicon Digital Co., Ltd., signed the Technology License Agreement with AscendVision, in which the two parties agreed that Silicon Digital's five non-patented technologies would be licensed to AscendMicro for use, and the license fee for the licensed technology would be US$1 million, and AscendMicro should pay royalties according to the use of the licensed technology by the product. From 2020 to 2022, the royalties generated by the above transactions were 16,100 yuan, 955,000 yuan, and 1,400,300 yuan respectively.

In addition, from 2020 to 2021, the cost of silicon number shares for Shengwei Micro was 448,800 yuan and 64,600 yuan respectively.

In this regard, the Shanghai Stock Exchange requires Silicon Digital Co., Ltd. to explain the specific content, rights and obligations of the related party transaction between the company and Sheng Macro, the necessity, reasonableness and fairness of the pricing of the related party transaction, the reasonableness of the company's disbursement of expenses, the final destination of the funds and the source of repayment funds.

Song Xiangqing, deputy dean of the Institute of Government Management and director of the Industrial Economy Research Center of Beijing Normal University, said that in the process of related party transactions, there may be irregular, unreasonable, and even illegal phenomena, involving a series of issues such as the transfer of interests of related parties, financial supervision information disclosure, and the protection of minority shareholders' rights and interests, so they will be focused on in the IPO review process.

In response to the company's related issues, a reporter from Beijing Business Daily sent an interview letter to Silicon Digital Co., Ltd., but as of press time, no reply from the company has been received.

Beijing Business Daily reporter Ding Ning