BDO China Shu Lun Pan CPAs LLP (Special General Partnership) Response to the "Audit Inquiry Letter Regarding the Application for Issuance of Shares to Specific Targets by Shenzhen MinDe Electronics Technology Co., Ltd."
Letter No. [blank] [2026] No. ZI594
Shenzhen Stock Exchange:
In accordance with the questions listed in the Audit Inquiry Letter [2026] No. 020060 (hereinafter referred to as the "Inquiry Letter") issued by your exchange regarding the application of Shenzhen MinDe Electronics Technology Co., Ltd. (hereinafter referred to as "MinDe Electronics," "the Issuer," or "the Company") for the issuance of shares to specific targets, BDO China Shu Lun Pan CPAs LLP (hereinafter referred to as "we" or "the Reporting Accountants"), acting as the reporting accountants for the issuance, has conducted a item-by-item verification and implementation of the accounting and auditing issues involved in the Inquiry Letter. We hereby provide our explanation regarding the verification and implementation of the issues in the Inquiry Letter as follows. The financial data for January-June 2026 appearing in the following response is unaudited.
Question:
The total amount of funds to be raised in this issuance shall not exceed 1 billion RMB (inclusive). After deducting issuance expenses, the raised funds will be invested in the characteristic high-voltage power semiconductor device and power integrated circuit wafer foundry project (hereinafter referred to as "Project I"), as well as for supplementing working capital and repaying bank loans.
The implementation entity for this fundraising project is the Issuer's holding subsidiary, Zhejiang Guangxin Microelectronics Co., Ltd. (hereinafter referred to as "Guangxin Microelectronics"). As of the end of the reporting period, the Issuer holds 50.10% of the shares of Guangxin Microelectronics. On May 9, 2026, and June 26, 2026, the Issuer disclosed twice the "Announcement on the Capital Increase of the Holding Subsidiary and the Company's Waiver of Preemptive Subscription Rights." Guangxin Microelectronics intends to introduce investors such as Huaxi Yinfeng Investment Co., Ltd. through capital increase and share expansion. After the completion of the aforementioned capital increase, the Issuer's equity ratio in Guangxin Microelectronics will decrease to 42.3380%. This fundraising project is funded by the Issuer providing loans to Guangxin Microelectronics, and minority shareholders do not provide loans in the same proportion.
Project I intends to increase wafer foundry capacity by building a new 6-inch power semiconductor wafer foundry production line. After reaching production, it is expected to add 60,000 wafers/month of wafer foundry capacity for products such as IGBT, ultra-high voltage VDMOS, and 700V high-voltage BCD suitable for high-voltage and high-power fields. In December 2025, Guangxin Microelectronics' wafer foundry output was 40,200 wafers; VDMOS products have been mass-produced; high-voltage IGBT and 700V high-voltage BCD products have not yet been mass-produced and are in the customer tape-out and introduction stage. After Project I is fully reached, it is expected to achieve an average annual operating income of 732 million RMB, an average annual net profit of 72.186 million RMB, and an average comprehensive gross profit margin of 27.71%.
The Issuer's previous fundraising was a 2022 private placement with a total amount of 500 million RMB, used for the "R&D and Industrialization Project of Silicon Carbide Power Devices," "Capacity Improvement and Technical Improvement Project of High-end Trench Schottky Diodes for New Energy Supply," and supplementing working capital. The previous fundraising projects all reached the intended usable state in July 2024, but none achieved the expected benefits. The "R&D and Industrialization Project of Silicon Carbide Power Devices" was expected to achieve an average annual net profit of 52.5437 million RMB, but as of December 31, 2025, it had not been mass-produced and had accumulated a benefit of 1.3118 million RMB. The "Capacity Improvement and Technical Improvement Project of High-end Trench Schottky Diodes for New Energy Supply" was expected to achieve an average annual net profit of 29.5681 million RMB, but as of December 31, 2025, it had accumulated a loss of 11.184 million RMB.