Stock abbreviation: Shengmei Shanghai Stock code: 688082

Shengmei Semiconductor Equipment (Shanghai) Co., Ltd

ACM Research（Shanghai）, Inc.

(China (Shanghai) Pilot Free Trade Zone, Nos. 5, 6, 7 and 8, Lane 999, Dangui Road)

Issue of A-shares to specific targets in 2024

Evidence analysis report of the issuance plan

(Revised)

October 2024

SEMEI Semiconductor Equipment (Shanghai) Co., Ltd. (hereinafter referred to as "SEMEI Shanghai" or the "Company") is a company listed on the Science and Technology Innovation Board of the Shanghai Stock Exchange. In order to meet the capital needs of the company's business development and enhance the company's capital strength and profitability, in accordance with the provisions of the People's Republic of China Company Law (hereinafter referred to as the "Company Law"), the People's Republic of China Securities Law (hereinafter referred to as the "Securities Law") and the Administrative Measures for the Registration of Securities Issuance of Listed Companies (hereinafter referred to as the "Registration Management Measures") and other relevant laws, administrative regulations, departmental rules or normative documents and the Articles of Association, the Company has prepared the 2024 annual issuance of A to specific targets Demonstration and analysis report of the stock issuance plan.

Unless otherwise specified in this argumentation and analysis report, the relevant terms have the same meanings as in the "Shengmei Semiconductor Equipment (Shanghai) Co., Ltd. 2024 Plan for Issuing A Shares to Specific Targets".

1. The background of the issuance of shares to specific targets

(1) The semiconductor industry has a good policy environment

In 2023, the Shanghai Municipal Government issued the "Policies and Measures on Strengthening Investment Promotion and Accelerating the Construction of a Modern Industrial System in the New Era", proposing to expand new space for leading industries such as integrated circuits, and actively attract hard-power high-quality enterprises to land in the fields of chip design, manufacturing, packaging and testing, equipment, and materials. In 2022, the Shanghai Municipal Commission of Economy and Information Technology and the Shanghai Municipal Bureau of Finance issued the "Special Reward Measures for the Core Team of Shanghai Integrated Circuit and Software Enterprises".

For eligible software and integrated circuits from November 25, 2022 to November 24, 2027

The core team of the enterprise will be rewarded to encourage the enterprise to expand and strengthen the industrial scale; In 2021, the Shanghai Municipal Government issued the Notice on Printing and Distributing Several Policies to Promote the High-Quality Development of Shanghai's Integrated Circuit Industry and Software Industry in the New Era, providing support in terms of talent incentive policies, enterprise cultivation support policies, investment and financing support policies, and R&D and application support policies for enterprises and institutions whose main business is integrated circuit production, equipment, materials, and design (including IP and EDA). Driven by a good policy environment, the semiconductor equipment industry has a good period of development opportunities.

(2) The market demand for semiconductor special equipment has maintained long-term growth

Since 2010, benefiting from the popularity of electronic products such as PCs and smartphones, Chinese mainland has gradually become a global electronic product manufacturing center, which has also led to the development of the upstream semiconductor industry. Thanks to the vigorous development of China's semiconductor industry and the good policy environment of the semiconductor industry, the scale of Chinese mainland's semiconductor equipment market has grown rapidly in recent years, and its share of the global market has also increased significantly.

From the perspective of global semiconductor equipment sales, Chinese mainland, Taiwan and Korea are the world's major players

The market share of the three regions increased from 39.94% in 2008 to 2020

72.98%。 Among them, semiconductor equipment sales in the Chinese mainland market increased from $1.89 billion in 2008

With $18.7 billion in 2020, its market share also rose from 6.40% to 26.30%, and it became the world's largest for the first time

A major semiconductor equipment market. In 2022, semiconductor equipment sales in the Chinese mainland market increased to US$28.3 billion, accounting for 26.26% of the global market share, becoming the world's largest semiconductor equipment market for the third consecutive year. According to SEMI statistics, in 2023, benefiting from the strong demand and consumption power of mature node technology in the Chinese mainland market, the global semiconductor equipment sales fell by 1.3% year-on-year, the Chinese mainland market

Bucking the trend, it grew by 29.47%, with sales reaching $36.6 billion, accounting for 34.45% of the global market share.

In recent years, driven by the wave of global core shortage and the strong demand of China's semiconductor market, Chinese mainland has once again set off a climax of wafer capacity construction. According to the statistics of Knometa Research's 2024 edition of the "Global Wafer Capacity Report", by the end of 2023, China's share of global wafer capacity will be 19.1%, which is expected

By 2025, China's share of capacity will be roughly equal to that of the leading countries. By 2026, IC crystals will be deployed in the world

Chinese mainland's share of round production capacity will reach 22.3%, becoming the world's largest source of IC wafer production capacity. Most of these new wafer production capacity is made by entities in Chinese mainland. The expansion of wafer production capacity has promoted the training of professionals in China's semiconductor industry and the development of supporting industries, and the benign development of the semiconductor industry environment has provided opportunities for the expansion and upgrading of China's semiconductor special equipment manufacturing industry.

(3) Platformization has become an important development trend in the semiconductor equipment industry

Although semiconductor equipment is a special equipment, it has certain common requirements in terms of accuracy, temperature control, and control of process chemicals. From the perspective of the development experience of international semiconductor equipment manufacturers, their long-term advantages in the semiconductor equipment market are not only due to the long-term cooperation with partners, so that they can maintain their leading position in technology, but also because they can provide partners with platform-based equipment and services. Under the strategy of platform development, semiconductor equipment manufacturers build basic platforms with basic technologies to achieve software and hardware standardization, reduce the difficulty of supply chain control and equipment maintenance, and create different products according to different processes in the face of diversified market demand.

In the early stage of the development of China's semiconductor equipment industry, China's semiconductor equipment manufacturers were not strong and generally gathered

Focus on a certain process equipment or a certain field to explore, the product line is relatively simple. After decades of development, China's semiconductor equipment manufacturers have achieved some technology accumulation, completed the industrialization of some process equipment, and have been deeply involved in the early research and development and cooperation of customers and supply chain enterprises, with the strength of innovation from point to surface, providing a foundation for the platform expansion of China's semiconductor equipment manufacturers. Through the platform, China's semiconductor equipment manufacturers can continue to expand their product lines, expand their market share, and enhance their comprehensive competitiveness, especially the experienced and powerful Chinese semiconductor equipment head manufacturers, who will have the opportunity to enter the international semiconductor equipment market, thereby promoting the common prosperity of the global semiconductor industry.

(4) The iterative upgrading of semiconductor equipment has become an important driving force for the development of the semiconductor industry

Semiconductor equipment generally refers to the production equipment required for the production of various semiconductor products. The main function of semiconductor equipment is to complete process steps such as material processing, film formation, etching, and cleaning in the semiconductor manufacturing process, as well as operations such as testing and screening of chips. The different process links of semiconductors need to be supported by corresponding equipment. Semiconductor equipment belongs to the support link of the semiconductor industry chain, and its performance and technical level directly determine the development and competitiveness of the semiconductor manufacturing field.

The iterative upgrading of semiconductor equipment is not only an inevitable requirement for the development of semiconductor technology, but also an important driving force for the development of the semiconductor industry. On the one hand, with the rapid development of semiconductor technology, the semiconductor process process is shrinking, the structure of semiconductor chips is becoming more and more complex, the difficulty of the manufacturing process is also increasing, the performance requirements for semiconductor equipment are constantly improving, and semiconductor equipment needs to be continuously upgraded to meet new technical needs. On the other hand, semiconductor equipment is the technology leader of the semiconductor industry, and the research and development of semiconductor equipment is usually 3-5 years ahead of the semiconductor process. Chip design, wafer manufacturing, packaging and testing in the semiconductor industry are all established within the scope of semiconductor equipment technology, and the technological progress of semiconductor equipment can promote the development of the semiconductor industry.

Therefore, the iterative upgrading of semiconductor equipment is crucial to promote the development of the semiconductor industry. With the continuous advancement of semiconductor technology and the continuous change of market demand, semiconductor equipment manufacturers need to continuously improve their R&D and innovation capabilities to adapt to the changing market environment.

(5) High-end semiconductor equipment is an area that needs to be broken through in the current and future semiconductor localization process

Semiconductor equipment products have the characteristics of complex technology, long R&D cycle, large investment, and extremely high technical threshold in the industry. The development of foreign leading enterprises started earlier, and gradually made use of their own market and technological advantages, through independence

At present, with the continuous advancement of the localization process of China's semiconductor equipment, the localization of semiconductor equipment has achieved certain results. From the perspective of the localization rate of semiconductor equipment subdivision products, the highest localization rate is the degumming equipment, which has reached more than 90%, and has basically achieved localization. According to Pacific Securities's "Semiconductor Equipment Localization Rate Increases, Independent and Controllable Ability Continues to Increase", the localization rate of heat treatment, etching equipment and cleaning equipment has reached about 20%. The localization rate of CMP and PVD equipment has reached about 10%. In addition, gluing and developing equipment is gradually achieving a breakthrough from 0 to 1.

China's semiconductor equipment companies have performed well in the localization of relatively non-core links. On the one hand, the technical difficulty of non-core link equipment is relatively low, and the independent research and development cycle is relatively short; On the other hand, in order to ensure the stability of the production line, downstream customers need to establish cooperative relations and trust with Chinese equipment companies in non-core links, so as to gradually purchase domestic equipment in large quantities in core links. In general, Chinese enterprises are still in the catch-up stage in the field of high-end semiconductor equipment, and need to increase investment and technology research and development efforts to improve their own technical level and core competitiveness. Therefore, high-end semiconductor equipment is a key area that needs to be broken in the current and future semiconductor localization process.

2. The necessity of the selection of the securities and their varieties for this issue

(1) The type and par value of the shares to be issued

The types of shares to be issued to specific targets are domestically listed RMB ordinary shares (A shares), with a par value of RMB1.00 per share.

(2) The necessity of the issuance of securities

1. Improve the level of R&D investment and further narrow the gap with overseas giants in the same industry

The semiconductor equipment industry in which the company is located belongs to the technology, capital-intensive industry, with the characteristics of fast product technology upgrading, large R&D investment, etc., the research and development in the field of semiconductor equipment is earlier than the application level, the company's product layout must be earlier than the customer's order demand, and at the same time, with the continuous shrinking of the chip manufacturing process, the high technical threshold of semiconductor equipment objectively requires high-intensity R&D investment. The world's leading companies in the same industry have invested a lot of money in research and development.

For example, Applied Materials invested $310,200 million in R&D in FY2023 and LAM in FY2023

R&D was $1,727.16 million, compared to $1,348.43 million in FY TEL2023

The company's R&D investment in 2023 will be RMB 658,358,800, which is still far behind the world's leading semiconductor companies. Through the implementation of this project, the company will continue to improve the level of investment in technology research and development, and further narrow the gap with overseas giants in the same industry in terms of investment in research and development.

2. Enhance the company's R&D strength, consolidate technical barriers, and help the implementation of the platform strategy

Semiconductor equipment production technology involves the comprehensive application of multidisciplinary and multi-field knowledge such as microelectronics, electrical, mechanical, materials, chemical engineering, fluid mechanics, automation, image recognition, communication, software system, etc., so technological innovation ability is one of the core competitiveness of enterprises in the industry. Since its establishment, the company has been committed to providing leading equipment and process solutions for the global integrated circuit industry, with excellent technology and rich product lines, has developed into one of the few semiconductor equipment suppliers in Chinese mainland with certain international competitiveness. However, with the advancement of semiconductor process technology and the market environment of intensified competition, the company still needs to continuously improve its R&D strength, continue to R&D and innovation, and consolidate technical barriers.

The investment project will help the company further enhance its R&D strength in the field of semiconductor special equipment, consolidate the company's technical barriers, and help the implementation of the platform strategy. The "R&D and process test platform construction project" will draw on the experience of international semiconductor equipment leading enterprises in setting up their own process test test lines, use the company's existing process test clean room to simulate the production environment of the wafer manufacturing plant, configure the necessary R&D and testing instruments and purchased equipment such as lithography machines, CMPs, ion implanters, etc., and combine a variety of self-made process equipment to build an integrated circuit equipment R&D and process test platform, so as to improve the company's industrial layout of R&D and testing links and enhance R&D and testing capabilities. Provide more complete testing services for the company's products from R&D to finalization, and accelerate the implementation of the company's platform-based strategic goals. "High-end semiconductor equipment iterative R&D project" mainly through the purchase of R&D software and hardware equipment, equipped with corresponding R&D personnel, for the company has formed the overall design of the equipment to carry out further iterative development, to ensure that key technologies and equipment have differentiated global independent intellectual property rights, to help the company expand the Chinese market and open up the international market, to promote the company's further development and growth, with the company's internationally competitive R&D strength, to become a multi-product comprehensive integrated circuit equipment enterprise group. So as to rank among the first echelon of global integrated circuit equipment enterprises.

3. Make full use of the advantages of the capital market, enhance capital strength, and enhance sustainable profitability

The semiconductor special equipment industry in which the company is located has significant capital-intensive characteristics, and the development of technology research and development activities, production and operation, and the market application and promotion of products and services require a large amount of continuous capital investment. On the one hand, with the continuous development of the company's business and the importance of semiconductor special equipment in China's semiconductor industry

The company needs to invest more money to meet its daily operational needs; On the other hand, according to market demand, the company continues to enrich the existing product line, gradually expand new products, and constantly expand the downstream market coverage and further expand the international market. The research and development of new products and technologies requires a large amount of capital investment. Therefore, the company urgently needs to further enhance its financial strength to support the sustainable and healthy development of its existing businesses on the basis of meeting the needs of future business development.

Through this issuance, it is conducive to enhancing the company's capital strength, and part of the funds raised in this issuance are intended to be used to supplement liquidity, and will also optimize the company's existing asset-liability structure, alleviate the short- and medium-term operating cash flow pressure, and reduce financial risks. At the same time, from the perspective of the company's long-term strategic development, the enhancement of financial strength will help the company give full play to the advantages of the listed company's platform, optimize the layout of the industrial chain, new business development, talent introduction and technology research and development innovation, continue to improve the depth and breadth of the main business, keenly grasp the market development opportunities, and realize the sustainable development of the company's main business.

3. The appropriateness of the selection scope, quantity and standards of the issuance object

(1) The appropriateness of the scope of selection of the object of this issuance

The issuance is targeted at no more than 35 specific targets that meet the conditions stipulated by the China Securities Regulatory Commission, including securities investment fund management companies, securities companies, trust companies, finance companies, asset management companies, insurance institutional investors, qualified foreign institutional investors, other domestic legal person investors, natural persons or other qualified investors. Securities investment fund management companies, securities companies, qualified foreign institutional investors and RMB qualified foreign institutional investors who subscribe for two or more products under their management shall be regarded as one issuance target; If the trust company is the object of issuance, it can only subscribe with its own funds.

The final issuance object shall be determined by the board of directors of the company and its authorized persons according to the authorization of the general meeting of shareholders, after the application for issuance is approved by the Shanghai Stock Exchange and the China Securities Regulatory Commission makes a decision to register, the board of directors of the company shall negotiate with the sponsor (lead underwriter) according to the results of the inquiry. If the national laws, regulations or normative documents at the time of issuance have other provisions on the object of issuance, such provisions shall prevail. All issuers subscribed for the shares issued in RMB cash at the same price.

The selection scope of the issuance object is in accordance with the relevant provisions of the Registration Administration Measures and other laws and regulations, and the selection scope of the issuance object is appropriate.

(2) The appropriateness of the number of objects to be issued

The number of issuance objects in this issuance shall not exceed 35 (including 35), and the number of issuance objects shall be in accordance with the "Note

Measures for the Administration of the Book and other relevant laws and regulations, and the number of issuance objects is appropriate.

(3) The appropriateness of the criteria for the object of this issuance

The target of this issuance should have a certain degree of risk identification and risk-bearing ability, and have the corresponding financial strength. The standards of the issuance object comply with the relevant provisions of laws and regulations such as the Registration Management Measures, and the standards of the issuance object are appropriate.

Fourth, the rationality of the principles, basis, methods and procedures of the pricing of this offering

(1) The pricing principles and basis of the offering

The issuance of shares to specific targets is issued by inquiry, and the pricing benchmark date of this issuance to specific targets is the first day of the issuance period.

The issue price of the shares issued to specific targets is not less than 80% of the average trading price of the company's shares in the 20 trading days before the pricing reference date, and the calculation formula of the above average price is as follows: the average stock trading price in the 20 trading days before the pricing reference date = the total stock trading volume in the 20 trading days before the pricing reference date / the total stock trading volume in the 20 trading days before the pricing reference date. If the company's shares are subject to dividends, share gifts, capital reserve conversion to share capital and other ex-rights and ex-dividends from the pricing benchmark date of the issuance to the issuance date, the issue price of the issuance will be adjusted accordingly, and the adjustment formula is as follows:

Cash dividends: P1=P0-D;

Sending shares or converting share capital: P1=P0/(1+N);

Two items at the same time: P1=(P0-D)/(1+N)

Among them, P0 is the issue price before adjustment, D is the cash dividend per share, and N is the gift or transfer per share

The number of shares to be increased, P1 is the adjusted issue price.

The final issue price will be issued by the board of directors of the company in accordance with the authorization of the general meeting of shareholders and the sponsor institution (lead underwriter) in accordance with the provisions of relevant laws and regulations and the requirements of the regulatory authorities, in accordance with the principle of price priority

The subscription price of the bank object shall be determined through negotiation, but shall not be lower than the aforesaid issue reserve price.

(2) The method and procedure of pricing the issuance are reasonable

The pricing methods and procedures of this offering are in accordance with the relevant provisions of laws and regulations such as the "Registration Management Measures", the company has convened a board of directors and disclosed the relevant announcements on the website of the exchange and the information disclosure media designated by the China Securities Regulatory Commission, and has been reviewed and approved by the company's general meeting of shareholders.

The method and procedure of pricing the issuance comply with the relevant provisions of the "Registration Management Measures" and other laws and regulations, and the method and procedure of the pricing of the offering are reasonable.

In summary, the principles, basis, methods and procedures of the pricing of this offering are in accordance with the requirements of relevant laws and regulations, and are compliant and reasonable.

5. The reasonableness of the principles, basis, methods and procedures of the pricing of this offering

(1) The issuance complies with the relevant provisions of the Company Law and the Securities Law

1. The shares issued this time are all RMB ordinary shares, the issuance conditions and prices of each share are the same, the types of shares issued this time are the same as the shares issued and listed by the issuer, all are RMB ordinary shares, each share has the same rights, in line with the provisions of Articles 142, 143 and 147 of the Company Law.

2. The issue price of the issued shares exceeds the par amount, which is in accordance with the provisions of Article 148 of the Company Law.

3. The issuance plan has been deliberated and approved by the eighth meeting of the second board of directors of the company, the first extraordinary general meeting of shareholders in 2024, and the fourteenth meeting of the second board of directors, in line with the provisions of Article 151 of the Company Law.

4. The company's issuance did not adopt the methods of advertising, public solicitation and disguised disclosure, which is in line with the provisions of Article 9 of the Securities Law.

The matters related to the issuance are subject to the approval of the Shanghai Stock Exchange and the registration of the China Securities Regulatory Commission, in accordance with the provisions of Article 12 of the Securities Law.

(2) The issuance plan complies with the relevant provisions of the Registration Management Measures

1. The company does not violate Article 11 of the Registration Management Measures:

"(1) Changing the use of the funds raised in the previous round without making corrections, or without the approval of the general meeting of shareholders;

(2) The preparation and disclosure of financial statements for the most recent year do not conform to the provisions of the accounting standards for business enterprises or relevant information disclosure rules in material respects; The audit report of the financial and accounting report of the most recent year has been issued with a negative opinion or cannot express an opinion; The audit report of the financial and accounting report of the most recent year has been issued with a qualified opinion, and the material adverse impact of the matters involved in the qualified opinion on the listed company has not been eliminated. Except for the issuance involving major asset restructuring;

(3) The current directors, supervisors and senior managers have been subject to administrative penalties by the China Securities Regulatory Commission in the past three years, or have been publicly reprimanded by the stock exchange in the past year;

(4) The listed company or its current directors, supervisors and senior managers are being investigated by the judicial authorities for suspected crimes or are being investigated by the China Securities Regulatory Commission for suspected violations of laws and regulations;

(5) The controlling shareholder or actual controller has committed major illegal acts that seriously harm the interests of the listed company or the lawful rights and interests of investors in the past three years;

(6) In the past three years, there have been major illegal acts that seriously harm the lawful rights and interests of investors or the public interest. ”

2. The use of the company's raised funds complies with the relevant provisions of Article 12 of the Registration Management Measures:

"(1) Complying with national industrial policies and relevant laws and administrative regulations on environmental protection and land management;

(2) Except for financial enterprises, the use of the raised funds shall not be for holding financial investments, and shall not directly or indirectly invest in companies whose main business is the trading of securities;

(3) After the implementation of the fund-raising project, there will be no new intra-industry competition with the controlling shareholder, the actual controller and other enterprises controlled by the controlling shareholder, the actual controller and other enterprises under their control, or the related party transaction that is obviously unfair, or the independence of the company's production and operation will be seriously affected;

(4) The funds raised by the issuance of shares by companies listed on the STAR Market shall be invested in industries in the field of scientific and technological innovation

Business. ”

(3) The Company does not fall within the scope of enterprises that need to be punished as provided for in the "Memorandum of Cooperation on the Implementation of Joint Disciplinary Action against Judgment Defaulters", the "Memorandum of Cooperation on the Implementation of Joint Disciplinary Action against Untrustworthy Enterprises by Customs", and the "Opinions on Strengthening the Sharing of Regulatory Information on Relevant Market Entities and Improving the Joint Disciplinary Action Mechanism for Untrustworthiness in the Pilot Program of the Registration-based System of the Science and Technology Innovation Board", and does not belong to the general untrustworthy enterprises and untrustworthy enterprises of the Customs

After verification, the company does not fall within the scope of enterprises that need to be punished as stipulated in the "Memorandum of Cooperation on the Implementation of Joint Disciplinary Action against Judgment Defaulters", "Memorandum of Cooperation on the Implementation of Joint Disciplinary Action against Judgment Defaulters" and the "Opinions on Strengthening the Sharing of Regulatory Information on Relevant Market Entities and Improving the Joint Disciplinary Action Mechanism for Untrustworthiness in the Pilot Program of the Registration-based System of the Science and Technology Innovation Board", and does not belong to the general untrustworthy enterprises and untrustworthy enterprises of the Customs.

(4) The company's issuance of shares to specific targets complies with <上市公司证券发行注册管理办法>the relevant provisions of the "Opinions on the Application of Securities and Futures Law No. 18 (hereinafter referred to as "Opinions on the Application of Securities and Futures Law No. 18") in accordance with the relevant provisions of Articles 9, 10, 11, 13, 40, 57 and 60

1. In accordance with the provisions of Article 1 of the Opinions on the Application of Securities and Futures Law No. 18, the amount of financial investment held by the company at the end of the latest period does not exceed 30% of the net assets attributable to the parent company in the company's consolidated statements, which meets the requirement of "there is no large amount of financial investment at the end of the latest period".

2. In accordance with the provisions of Article 2 of the Opinions on the Application of Securities and Futures Law No. 18, in the past three years, the company (including subsidiaries) and its controlling shareholders and actual controllers have not violated laws, administrative regulations or rules, and have been subject to criminal penalties or serious administrative penalties, that is, there are no major illegal acts.

3. Comply with the provisions of Article 4 of the Opinions on the Application of Securities and Futures Law No. 18

(1) If a listed company applies for the issuance of shares to a specific target, the number of shares to be issued shall not exceed 30% of the total share capital before the issuance. The total amount of funds to be raised this time is 450,000.00 yuan.

The number of shares issued to specific targets this time shall not exceed 10% of the total share capital of the company before the issuance, and the final approval of the Shanghai Stock Exchange and the approval of the China Securities Regulatory Commission shall prevail.

(2) If a listed company applies for additional issuance, allotment of shares, or issuance of shares to specific objects, the date of the resolution of the board of directors of this issuance shall not be less than 18 months from the date of arrival of the previous raised funds in principle. The previous fundraising was basically made

If the use is completed or the investment direction of the raised funds has not changed and the investment is carried out as planned, the corresponding interval shall not be less than six months in principle. The above provisions do not apply to the previous fund-raising including initial offering, additional issuance, allotment of shares, issuance of shares to specific targets, issuance of convertible bonds, preferred shares, issuance of shares to purchase assets and supporting fund-raising, and the application of simplified procedures.

The company has fulfilled the decision-making procedures of the board of directors on matters related to this issuance, and the date of the board of directors' resolution has been more than 18 months from the date of receipt of the previous raised funds.

4. In accordance with the provisions of Article 5 of the Opinions on the Application of Securities and Futures Law No. 18, the total amount of funds raised by issuing A shares to specific targets this time shall not exceed 450,000.00 yuan (including this number), and the raised funds will be used for "R&D and process test platform construction projects", "high-end semiconductor equipment iterative R&D projects" and supplementary working capital after deducting relevant issuance expenses, of which the total amount of non-capital expenditure and supplementary liquidity shall not exceed 30% of the total amount of funds raised.

(5) The issuance procedure is legal and compliant

The issuance plan has been deliberated and approved by the eighth meeting of the second board of directors of the company, the first extraordinary general meeting of shareholders in 2024, and the fourteenth meeting of the second board of directors, and has been disclosed on the website of the exchange and the designated information disclosure media, and the necessary review procedures and information disclosure procedures have been fulfilled. The issuance plan is subject to the approval of the Shanghai Stock Exchange and the approval of the China Securities Regulatory Commission before it can be implemented.

In summary, the company does not have the circumstance that it is not allowed to issue securities, the issuance complies with the provisions of relevant laws and regulations, the issuance method also meets the requirements of relevant laws and regulations, and the review procedure and issuance method are legal, compliant and feasible. 6. The fairness and reasonableness of the issuance plan

The issuance plan has been deliberated and approved by the eighth meeting of the second board of directors of the company, the first extraordinary general meeting of shareholders in 2024, and the fourteenth meeting of the second board of directors. The implementation of the issuance plan will be conducive to the sustainable and stable development of the company, and is conducive to increasing the rights and interests of all shareholders, which is in line with the interests of all shareholders.

The issuance plan and related documents to specific targets were disclosed on the website of the Shanghai Stock Exchange and the media that meet the conditions stipulated by the China Securities Regulatory Commission, ensuring the right to know of all shareholders.

To sum up, the issuance plan to specific objects has been approved by the board of directors of the company after careful study, and the plan is in line with the interests of all shareholders; The issuance plan and related documents to specific targets have fulfilled the relevant disclosure process

At the same time, the plan to issue shares to specific objects has been accepted by the shareholders participating in the fair vote at the general meeting of shareholders, which is fair and reasonable.

7. The impact of the issuance on the dilution of the original shareholders' equity or immediate return and the specific measures to fill it

(1) The impact of the issuance on the company's main financial indicators

1. Calculation assumptions and premises

The following assumptions are only to measure the impact of the diluted spot return of the issuance on the company's main financial indicators, and do not represent the company's judgment on future operating conditions and trends, nor do they constitute profit forecasts. Investors should not make investment decisions based on this, and the company shall not be liable for compensation if investors make investment decisions based on this and cause losses.

(1) It is assumed that the offering is expected to close in June 2025. This completion time is only used to calculate the current issue

The impact of the bank on the diluted spot return is ultimately subject to the time when the issuance is registered with the CSRC and the actual issuance is completed.

(2) It is assumed that there are no major changes in the macroeconomic environment, industrial policies, industry development conditions, product market conditions, etc.

(3) Assuming that the total amount of funds raised this time does not exceed RMB 450,000.00 (inclusive), the impact of issuance costs and other impacts will not be considered for the time being. It is assumed that the number of shares to be issued is not more than 10% of the company's total share capital before the issuance, that is, no more than 43,615,356 shares (including the number of shares). When forecasting the total share capital of the company, only the impact of the issuance of shares is considered, and the changes in share capital caused by equity incentives, option incentives, conversion increases, repurchases, share payments and other factors are not considered.

(4) The company's net profit attributable to shareholders of listed companies from January to June 2024 after deducting non-recurring gains and losses

was 434.5392 million yuan, and the net profit attributable to shareholders of listed companies before and after deducting non-recurring gains and losses in 2024

According to the annualized performance data from January to June 2024, it is estimated to be 869.0784 million yuan. Assuming 2025 year realization

net profit attributable to owners of the parent company and net of non-recurring gains and losses attributable to owners of the parent company

Compared with 2024, the net profit will increase by 20%, remain flat, and decrease by 20%, and 2025 will be calculated accordingly

Net profit attributable to owners of the parent company for the year and net profit attributable to owners of the parent company after deducting non-recurring gains and losses. This assumption is only used to calculate the impact of the diluted spot return of the issuance of shares to specific targets on the main financial indicators, and does not represent the company's judgment on the future operating conditions and trends, nor does it constitute the company's profit forecast.

(5) The number of shares to be issued to specific targets, the amount of funds raised, and the time of issuance are only based on the assumption of calculation purposes, and the actual number of shares issued, the issuance result and the actual date shall prevail.

(6) When calculating the number of ordinary shares outstanding, only the impact of the issuance on the total share capital shall be considered, and the changes in share capital caused by equity incentives, option incentives, share repurchase and cancellation, and conversion of provident fund into share capital shall not be considered.

(7) This calculation does not take into account the impact on the company's production and operation and financial status (such as financial expenses and investment income) after the funds raised in this issuance are received.

2. The impact on the company's main financial indicators

Based on the above assumptions, the Company has calculated the impact of the Offering on key financial indicators such as earnings per share, as shown in the table below:

Project 2024 / 2024 2025 / December 31, 2025

December 31, Japan before the issuance After this issuance

Total share capital at the end of the period (10,000 shares) 43,615.36 43,615.36 47,976.89

Assumption 1: The net profit attributable to ordinary shareholders of the listed company after deducting non-recurring gains and losses realized in 2025 is higher

20% annual growth in 2024

After deducting non-recurring gains and losses, it was attributable to the listed company 86,907.84 104,289.41 104,289.41

Net profit of shareholders (10,000 yuan)

Basic earnings per share after deducting non-recurring gains and losses 1.99 2.39 2.28

(RMB/Share)

Diluted earnings per share after deducting non-recurring gains and losses 1.96 2.35 2.24

(RMB/Share)

Assumption 2: The net profit attributable to ordinary shareholders of the listed company after deducting non-recurring gains and losses realized in 2025 is higher

Unchanged for 2024

After deducting non-recurring gains and losses, it was attributable to the listed company 86,907.84 86,907.84 86,907.84

Net profit of shareholders (10,000 yuan)

Basic earnings per share after deducting non-recurring gains and losses 1.99 1.99 1.90

(RMB/Share)

Diluted earnings per share after deducting non-recurring gains and losses 1.96 1.96 1.87

(RMB/Share)

Assumption 3: The net profit attributable to ordinary shareholders of the listed company after deducting non-recurring gains and losses realized in 2025 is higher

20% reduction in FY2024

After deducting non-recurring gains and losses, it was attributable to the listed company 86,907.84 69,526.27 69,526.27

Net profit of shareholders (10,000 yuan)

Basic earnings per share after deducting non-recurring gains and losses 1.99 1.59 1.52

(RMB/Share)

Diluted earnings per share after deducting non-recurring gains and losses 1.96 1.57 1.49

(RMB/Share)

Note: Basic earnings per share and diluted earnings per share are calculated in accordance with the provisions of the Rules for the Preparation of Information Disclosure of Companies Offering Securities to the Public No. 9 - Calculation and Disclosure of Return on Net Assets and Earnings per Share.

(2) Risk warning of dilution of spot returns in this issuance

After the completion of the issuance of shares to specific targets, the company's total share capital and net assets will increase. In view of the fact that it takes a certain period to use the raised funds and generate benefits, in the case of the increase in the company's share capital and net assets, if the company's performance does not achieve a corresponding increase in the current extent, the company's immediate return (earnings per share and other financial indicators) will be diluted after the completion of the issuance to specific objects. In addition, in the event of a significant change in the assumptions of the foregoing analysis or in the Company's operating conditions, the possibility of a change in the dilution of the immediate return as a result of the Offering cannot be ruled out.

The company's profitability assumption is only to measure the impact of the diluted spot return issued to specific objects on the company's main financial indicators, and does not represent the company's judgment on the operating situation and trend, nor does it constitute the company's profit forecast and performance commitment, and investors should not make investment decisions based on this assumption. The company shall not be liable for any losses caused by investors making investment decisions based on this.

(3) The necessity and reasonableness of the issuance

The necessity and reasonableness of this issuance are detailed in the relevant content of "II. (2) The necessity of the issuance of securities" in this report.

(4) The relationship between the raised funds investment project and the company's existing business, and the company's reserves in terms of personnel, technology, and market for the fund-raising project

1. The relationship between the raised funds investment project and the company's existing business

Since its establishment, the company has been committed to providing leading equipment and process solutions for the global integrated circuit industry, adhering to the development strategy of differentiated international competition and original innovation, through independent research and development, the establishment of a relatively complete intellectual property system, with rich technology and process accumulation, the formation of an international leading level or advanced level of front-end semiconductor process equipment, including cleaning equipment, semiconductor electroplating equipment, vertical furnace series equipment, front-end gluing and developing Track equipment, plasma-enhanced chemical vapor deposition (PECVD) equipment, stress-free polishing equipment; Back-end advanced packaging process equipment and silicon material substrate manufacturing process equipment.

With the integrated application experience accumulated over many years in the integrated circuit equipment industry, the company has mastered mature core key process technology, manufacturing capabilities and original innovation research and development capabilities, and has a mature supply chain management

and manufacturing system, and at the same time meet the needs of the middle and downstream application markets of the integrated circuit industry chain. With leading technology and rich product lines, the company has developed into one of the few semiconductor equipment suppliers with certain international competitiveness in Chinese mainland, and its products have been recognized by many mainstream semiconductor manufacturers at home and abroad, and have achieved a good market reputation.

The fund-raising projects involved in this issuance include R&D and process test platform construction projects, high-end semiconductor equipment iterative R&D projects and supplementary working capital, which are closely related to the company's main business, which is an extension and expansion of the existing main business, in line with the company's long-term development plan and business layout, conforms to the development direction of the industry market, and has a high degree of relevance to the development of the company's existing main business.

The implementation of this fundraising project will further enhance the company's market competitiveness, effectively improve the company's R&D strength, consolidate and further enhance the company's competitive position in the industry, and achieve the company's long-term sustainable development.

2. The company is engaged in the reserve of raised funds investment projects in terms of personnel, technology, market, etc

(1) Personnel reserves

The company attaches great importance to the construction and training of technology R&D team, and encourages independent innovation and independent R&D. Since its establishment, the company has continued to cultivate and introduce professionals in the global industry, and after years of accumulation, the company has an international and professional technical research and development team. The company's core technology R&D team has international competitiveness, and most of the main core technical personnel have overseas study or work experience, and have an international vision and thinking, which is conducive to learning and mastering international leading technology. In addition, the company has set up a professional R&D team in Korea, relying on Korea's technical talents in the field of machinery and electronics, and learning from the R&D team in Chinese mainland. Through the establishment of an international and professional technical research and development team, and adhere to the differentiated technological innovation and competitive strategy, the company ensures that the company can continue to launch new products, and continuously improve existing products, consolidate and enhance the company's technical research

Hair ability. As of June 30, 2024, the number of R&D personnel in the company is 776, accounting for the total number of employees in the company

of 46.22%. During the reporting period, the company's core technology R&D team was stable and had strong technical R&D team advantages.

In the future, the company plans to further increase R&D investment, continue to introduce high-level talents, continuously expand the scale of the company's R&D team, further improve the comprehensive ability and level of the R&D team, and reserve sufficient talents for the company's fund-raising investment project.

(2) Technical reserves

The company's main products include front-end semiconductor process equipment, including cleaning equipment, semiconductor electroplating equipment,

Vertical furnace series equipment (including oxidation, diffusion, vacuum tempering, LPCVD, ALD), gluing and developing track equipment, plasma-enhanced chemical vapor deposition PECVD equipment, stress-free polishing equipment; Through years of technology research and development, the company has mastered the relevant core technologies in the above product fields, and continues to innovate in continuously improving equipment process performance and production capacity, improving customer product yield and reducing customer costs. These core technologies have been continuously applied in the products sold by the company and formed the competitiveness of the company's products.

The National Integrated Circuit Innovation Center and Shanghai Integrated Circuit R&D Center Co., Ltd. were launched on June 20, 2020

The company's core technology was evaluated, and the "Evaluation of the Core Technology of Shengmei Semiconductor Equipment (Shanghai) Co., Ltd." was issued, and the core technology of Shengmei Shanghai is mainly used in semiconductor cleaning equipment, stress-free polishing equipment and electroplating copper equipment. Compared with well-known equipment manufacturers at home and abroad, the core technologies such as SAPS megasonic cleaning technology, TEBO megasonic cleaning technology, single-wafer trough combination Tahoe high-temperature sulfuric acid cleaning technology, stress-free polishing technology, and multi-anode electroplating technology have reached the international leading or international advanced level.

In terms of R&D achievements, continuous R&D investment has also accumulated a large number of technological achievements for the company, as of 2024

As of June 30, the company and its holding subsidiaries had 463 major patents that had been granted patents, including:

There are 177 domestic authorized patents, 286 overseas authorized patents, and a total of 461 invention patents. With recent years

With the deep integration of R&D achievements and industry, the company has been rated as one of the "Top Five Semiconductor Equipment Enterprises in China" for many years, selected as the first batch of enterprise key laboratories issued by the Shanghai Municipal Science and Technology Commission, and SAPS megasonic cleaning technology won the first prize of Shanghai Science and Technology Progress Award in 2020. In addition, the company was rated as a national "specialized, special and new" enterprise.

At present, the company has established a relatively complete core technology system and technological achievement protection system, and formed a complete technological achievement transformation system of independent research and development, design and production to promote the company's technology to achieve industrial transformation. Therefore, the company's rich technical reserves and excellent technology transformation capabilities provide technical support for the implementation of the project.

(3) Market reserves

The technology of integrated circuit manufacturing is complex, the process steps are numerous, the production of equipment required is more, the efficiency and reliability of a single equipment will directly affect the efficiency of the entire production line and the yield of chip products, so the integrated circuit manufacturing enterprises are very cautious in the selection of new equipment, and need to go through a long verification cycle.

With leading technology and rich product lines, the company has developed into one of the few semiconductor equipment suppliers with certain international competitiveness in Chinese mainland, and its products have been recognized by many mainstream semiconductor manufacturers at home and abroad, and have achieved a good market reputation. The company's products have received orders from customers including Hynix, Huahong Group, SMIC, Yangtze River Storage, Hefei Changxin, Xinen Semiconductor, Silan Micro, Jinghe, BYD Semiconductor, Star, Shanghai IC R&D Center, Shenghe Jingwei, Changdian Technology, Tongfu Microelectronics, Huatian Technology, V-SOL, Texas Instruments, Zhongke Zhixin, Quliang Electronics, Nepes, Jin Ruihong, Taiwan Hejing Technology, Chengdu Yicheng, Institute of Microelectronics of Chinese Academy of Sciences, Huajin Semiconductor, Xiamen Lianxin and other customers. Through the cooperation with the above-mentioned well-known customers, the company has accumulated a high brand and market awareness, which has a strong demonstration effect, which helps the company to further expand potential customers and has a good market foundation.

To sum up, the company's raised funds investment project has a good foundation in terms of personnel, technology, and market. With the construction of the raised funds investment project, the company will further improve the reserves of personnel, technology, market and other aspects to ensure the smooth implementation of the project.

(5) Measures taken by the company to dilute the immediate return of the issuance

The issuance may lead to a decline in the immediate return of investors, in order to protect the interests of investors, the company has taken the following measures to enhance the company's competitiveness to make up for shareholder returns.

1. Rapidly improve the overall strength of the company and expand the company's business scale

After the company's issuance, the company's total assets will be further enhanced, the anti-risk ability and comprehensive strength will be significantly enhanced, and the market value will be significantly enhanced. With the help of the capital market and good development opportunities, the company will continue to expand the scale of its main business, give full play to the company's advantages in the field of semiconductor special equipment, and promote the company's sustainable, healthy and stable development.

2. Strengthen internal management and reduce operating costs

The company will actively promote the optimization of product technology, the improvement of process flow, the transformation and upgrading of technical equipment, strengthen refined management, continue to improve production and operation efficiency, and continuously reduce production loss. At the same time, the company will strengthen budget management, control the company's expense ratio, and improve profitability.

3. Accelerate the implementation progress of investment projects with raised funds and strengthen the management of raised funds

The investment projects of the raised funds are all focused on the company's main business, which is conducive to enhancing the company's comprehensive competition

Competitiveness and profitability. After the raised funds are in place, the company will accelerate the implementation of the raised funds investment project and realize the expected benefits as soon as possible. At the same time, the company will strengthen the management of raised funds and standardize the use of raised funds in accordance with the requirements of the Articles of Association of Shengmei Semiconductor Equipment (Shanghai) Co., Ltd. and the Management System for Raised Funds of Shengmei Semiconductor Equipment (Shanghai) Co., Ltd. to ensure that the raised funds are realized in accordance with the established purposes.

4. Improve the profit distribution policy and strengthen the return of investors

In accordance with the requirements of the China Securities Regulatory Commission's Notice on Further Implementing Matters Concerning Cash Dividends of Listed Companies, Regulatory Guidelines for Listed Companies No. 3 - Cash Dividends of Listed Companies, and other relevant regulations, combined with the actual situation of the company, in order to clarify the return on the company's shareholders' equity dividends, the company has further refined the provisions on the principle of dividend distribution in the Articles of Association of Shengmei Semiconductor Equipment (Shanghai) Co., Ltd., and formulated the Shengmei Semiconductor Equipment (Shanghai) Co., Ltd. Shareholder Dividend Return Plan for the Next Three Years (2024-2026). The company will strictly implement the profit distribution policy, and actively implement the profit distribution to shareholders and optimize the return on investment mechanism if the distribution conditions are met.

The Company's formulation of the above-mentioned compensation measures does not amount to a guarantee for the Company's future profits, and investors should not make investment decisions based on them, and the Company shall not be liable for compensation for losses caused by investors' investment decisions based on them.

(8) The commitment of the company's directors, senior management personnel, and the company's controlling shareholders and actual controllers to the company's compensation measures

1. The company's directors and senior management personnel can effectively fulfill the company's compensation measures

All directors and senior management of the Company make the following commitments:

"1. I promise to perform my duties faithfully and diligently, and safeguard the legitimate rights and interests of the listed company and all shareholders;

2. I promise not to transfer benefits to other units or individuals free of charge or under unfair conditions, nor to damage the interests of listed companies in other ways;

3. I promise to restrain my duty consumption behavior;

4. I promise not to use the assets of the listed company to engage in investment and consumption activities unrelated to my performance of duties;

5. Within the scope of my legal authority, promote the remuneration system formulated by the board of directors or the remuneration and appraisal committee to be linked to the implementation of the listed company's compensation measures;

6. In the future, if the listed company implements the equity incentive plan, within the scope of my legal authority, the exercise conditions set by the equity incentive plan to be announced will be linked to the implementation of the listed company's compensation measures;

7. I promise to strictly fulfill the above commitments to ensure that the listed company's compensation measures can be effectively fulfilled. If I violate the commitments I have made or refuse to fulfill my commitments, I agree that the China Securities Regulatory Commission, the Shanghai Stock Exchange and other securities regulatory authorities shall take relevant penalties or regulatory measures against me in accordance with the relevant regulations and rules formulated or promulgated by them. ”

2. The company's controlling shareholders and actual controllers can effectively fulfill the relevant commitments of the company's compensation measures

The controlling shareholder and actual controller of the company make the following commitments:

"1. Do not interfere with the company's operation and management activities beyond its authority, and do not encroach on the company's interests;

2. Urge listed companies to earnestly implement measures to fill diluted spot returns;

3. From the date of signing of this letter of commitment to the completion of the company's issuance, if the China Securities Regulatory Commission makes other new regulatory provisions on the return and its commitments, and the above commitments cannot meet the requirements of the China Securities Regulatory Commission, the company/I promise to issue supplementary commitments in accordance with the latest regulations of the China Securities Regulatory Commission;

4. Earnestly fulfill the relevant compensation measures formulated by the company and any commitments made by the company/myself on the compensation measures, if the company/I violate these commitments and cause losses to the company or investors, the company/I am willing to bear the corresponding compensation liability to the company or investors in accordance with the law. ”

8. Conclusion

To sum up, the company's plan to issue shares to specific targets is fair, reasonable, necessary and feasible, and complies with the provisions of relevant laws and regulations. The implementation of the plan to issue shares to specific targets will be conducive to further improving the operating performance of the listed company, in line with the company's development strategy, and in line with the interests of the company and all shareholders.

Shengmei Semiconductor Equipment (Shanghai) Co., Ltd

board of directors

October 22, 2024