Aug 8, 2022

Enhancing Shareholder Base and Expanding Capital Strengths to Affirm the Development Strategies in GaN Arena HONG KONG, Aug 8, 2022 - (ACN Newswire) - HG Semiconductor Limited ("HG Semiconductor", together with its subsidiaries, "the Group", Stock Code: 6908.HK) has announced placement of 30 million new shares ("Placing Shares") at the placing price of HK$3.20 per share to no less than six placees. In addition, the Group has entered into an investment agreement ("Investment Agreement") with Profit Act Limited ("Strategic Investor"), an entity indirect wholly-owned by the Founder, Chairman and Executive Director GCL Technology Holdings Limited (Stock Code: 3800.HK) Mr. Zhu Gongshan ("Mr. Zhu"), pursuant to which the Group had conditionally agreed to allot and issue, and Strategic Investor had conditionally agreed to subscribe for 60 million subscription shares ("Shares Subscription") and 60 million warrants ("Warrants Subscription"). As at 5 August 2022, the Group has 563,591,000 shares in issue. Pursuant to the placing agreement, the Placing Shares represent approximately 5.32% of the existing issued share capital of the Group. After deducting the placing commission and other relevant expenses, the maximum net proceeds will amount to approximately HK$93.6 million. The Group intends to use approximately HK$78.0 million of the proceeds for strengthening its research and development ("R&D") capabilities of semiconductor business including light-emitting diode ("LED"), Mini LED, fast charging, gallium nitride ("GaN") devices and related products, which includes set-up of R&D centres, recruitment of R&D professionals, and the procurement of equipment and materials with an aim to develop and/ or capture patent and technology. The remains of the net proceeds will be used for provision of general working capital and improving the financial position of the Group. In regard to the Investment Agreement with Strategic Investor, the Shares Subscription price is HK$3.00 per subscription share, while the subscription price of each warrant share upon exercise of the warrants will be HK$3.68. After deduction of relevant costs and expenses, the gross and net proceeds from the Shares Subscription and full exercising of the subscription rights attaching to the warrants will be approximately HK$180.0 million and approximately HK$220.8 million respectively. The Group proposes to use the proceeds from the Shares Subscription and Warrants Subscription for the development of GaN business. The subscription shares and warrants shares cannot be sold or transferred for 18 months commencing on the date of issuance. Meanwhile, the Strategic Investor will conduct due diligence examinations on the Group regarding its business, financial, and legal aspects etc. If the results of the due diligence examinations are to the satisfaction of Mr. Zhu, the Strategic Investor will participate in the Shares Subscription and the Warrants Subscription. The subscription shares and warrant shares will be allotted and issued under the Shares Specific Mandate to be sought from the shareholders at extraordinary general meeting (EGM). Mr. Zhu is the Founder, Chairman and Executive Director of GCL Technology Holdings Limited. He was a member of the 12th National Committee of the Chinese People's Political Consultative Conference (the "CPPCC") and is currently a member of the 12th Jiangsu Province Committee of the CPPCC, the chairman of Global Green Energy Industry Council, the vice chairman of Global Innovation Centre, the chairman of Asian Photovoltaic Industry Association, the deputy director of the Green and Low Carbon Development Promotion Committee of China Enterprise Confederation, the executive vice president of the Energy Storage and Electric Vehicle Branch of China Electricity Council. Over the years, Mr. Zhu has been deeply involved in the fields of electric power, photovoltaic, natural gas, new energy vehicle operation and semiconductor. In addition, he attaches great importance to scientific and technological innovation. The Investment Agreement between the Group and the Strategic Investor signifies the trust and support of Mr. Zhu, giving the Group a strong vote of confidence in further solidifying the business strategies and development of GaN. Subsequent to the personal investment in HG Semiconductor by Dr. Justin Chiu, Executive Director of CK Asset Holdings Limited (Stock Code: 1113.HK), the management of the Group is delighted to introduce more new investors. The Shares Subscription and Warrants Subscription represent a good opportunity for the Group to raise additional capital for expanding its GaN business, so as to expedite the Group's development. In view of the steadfast development of global new energy vehicles, coupled with global geopolitical risks and other factors, various countries fully support the development of the semiconductor industry (particularly the third-generation semiconductor), the Group's GaN business is poised to embrace bright prospects. Leveraging the background of Mr. Zhu as a strategic shareholder, the Group expects (i) further coordination of resources in the new energy industry with Strategic Investor alongside strategic synergy with the Group's third-generation semiconductors (especially power chips) to form complementary industrial resources; (ii) the use of Strategic Investor's financial resources and business network in the financial system to assist the Group in the rapid development of production capacity and products; (iii) facilitation of the Group to work closely with local governments to improve the policies and supports for the third-generation semiconductor industry; and (iv) that the Strategic Investor will share experiences in operation and management to assist the Group to build up its talents, operations, technology and R&D. Looking ahead, the Group will continue to proactively pursue technological innovation, refine its business strategies to capture market opportunities and accelerate growth in its GaN semiconductor business, striving to generate continuous and stable returns for its shareholders in the long run. About HG Semiconductor Limited HG Semiconductor Limited (6908.HK) is principally engaged in semiconductor product business in China, including the design, development, manufacturing, subcontracting services and sales of light-emitting diode ("LED") beads and a new generation of semiconductor gallium nitride ("GaN"). The Group is committed to accelerating its research and development and expansion in the application of GaN related products, with an aim to become a leading semiconductor company with the integration of design, manufacturing and sales of semiconductor chips, as well as providing total solutions with higher efficiency and competitive system cost. For more details, please visit www.hg-semiconductor.com Topic: Press release summary