Project Overview
According to the official of Fujian Provincial Industrial Equipment Installation Co., Ltd., the main structure of the #1 microchip display front-end factory for the Mini/Micro display industrialization project (Phase II) by Sanan Optoelectronics has successfully topped out. Moving forward, the project team will continue to prioritize safety production, civilized construction, and quality control, accelerating construction at all critical nodes to ensure timely project delivery.
Mini/Micro display Industrialization Project Details
The Quanzhou branch of Fujian Provincial Industrial Equipment Installation Co., Ltd. is responsible for the civil engineering, piping, and electrical construction of this project. The Mini/Micro display industrialization project (Phase II) is located in the Gedian Economic and Technological Development Zone in Ezhou, Hubei Province, and aims to establish a Mini/Micro LED chip production base with independent intellectual property rights that will have international influence upon completion.
Overcoming Challenges
Since the start of construction, the project team has overcome various adverse factors, including complex geological conditions, the difficulty of pile foundation construction, and hot, rainy weather. They continuously optimized construction organization by increasing resource input and reasonably allocating manpower and material resources. This resulted in a relentless push for progress and quality in production, maintaining a state of “staff rotation, machines in continuous operation.” Ultimately, with the collective efforts of all participating parties, the construction of the factory’s main structure has been successfully completed. The project team will continue to focus on safety production, civilized construction, and quality control, speeding up construction at critical nodes to ensure the project is delivered on schedule.
Financial Insights
According to Sanan Optoelectronics‘ 2023 financial report, Hubei Sanan primarily engages in the production of Mini/Micro LED epitaxial wafers, chips, and deep processing of chips, with a total investment of $1.68 billion (including land use rights and working capital) and a total construction area of 477,700 square meters, built in two phases. Upon reaching full production, the project will add an annual chip production capacity of approximately 2.36 million chips (equivalent to 4-inch wafers) and 84,000 units of packaging products for 4K displays. The annual chip production capacity includes 1.61 million gallium nitride Mini/Micro LED chips and 750,000 gallium arsenide Mini/Micro LED chips (both equivalent to 4-inch wafers).
Investment Progress
As of the end of 2023, a total of $334 million has been invested in the Mini/Micro display industrialization project, forming fixed assets of $280 million, ongoing construction projects valued at $21 million, and intangible assets (land use rights) valued at $24 million. A construction area of 294,500 square meters has been completed, with 207,800 square meters now in use and the remaining area under renovation. The project currently employs 825 staff members and has purchased 4,995 sets of equipment, all of which have been installed and tested, achieving a production capacity of 125,000 chips per month. During the reporting period, the project generated a revenue of $37 million, down 6.65% year-over-year, while net profits reached $43 million, a year-over-year increase of 1,614.97%. The Mini LED market is rapidly penetrating the backlighting market, with direct display application scenarios continuously expanding. As the market size and demand for Mini/Micro LEDs grow, Hubei Sanan is expected to leverage its technological strength and customer relationships to drive significant revenue growth.
Project Progress Details
- July 2019: The Hubei Sanan Mini/Micro display industrialization project officially commenced.
- April 2021: Phase I of the project (220,000 square meters) officially entered trial production, with mass production starting in June.
- By the end of December 2023: Approximately $1.01 billion has been invested in the project, with a completed construction area of 294,500 square meters, of which 207,800 square meters are in use. More than 4,900 sets of equipment have been purchased, achieving a production capacity of 125,000 chips per month. For the entire year, the project generated a total output value of $195 million and sales of $137 million, with a net profit of $43 million and a capacity utilization rate of approximately 80%.
- In the first half of this year: The project achieved a revenue of $34 million, up 133.29% year-over-year, with net profits of $11 million, an increase of 493.03% year-over-year.
- In mid-October 2024: The main structure of the #1 microchip display front-end factory for the Mini/Micro LED chip industrialization project (Phase II) was successfully topped out.
Fundraising and Future Plans
Regarding fundraising, in 2021, Sanan Optoelectronics planned a non-public offering to raise $1.11 billion for the investment and construction of the Hubei Sanan Optoelectronics Mini/Micro display industrialization project and to supplement working capital. As of December 31, 2023, approximately $252 million of the raised funds has been utilized, with most of the supplemental working capital already expended.
However, on April 26 this year, Sanan Optoelectronics announced a postponement of its fundraising investment project. The announcement stated that to better achieve returns for investors and promote the company’s long-term development, the company has decided to extend the date for the “Hubei Sanan Optoelectronics Mini/Micro display industrialization project” to reach a predetermined usable state until June 2026 (originally scheduled for June 2024).
Sanan Optoelectronics stated that the “Hubei Sanan Optoelectronics Mini/Micro display industrialization project” underwent thorough feasibility studies, but various factors have delayed the project’s advancement. On one hand, international trade friction has resulted in longer delivery times for certain equipment, impacting the overall construction schedule of the fundraising project. On the other hand, geopolitical and economic factors have slowed the relevant application markets. In light of the changing market environment, the company has adhered to the principle of cautious use of raised funds, leading to a more prudent investment approach in the fundraising project area, thereby slowing the project’s implementation progress. Additionally, the timing of the raised funds arriving was later than expected.
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