Haitong Securities Co., Ltd. about

Shengmei Semiconductor Equipment (Shanghai) Co., Ltd

2024 Annual Follow-up Report for Continuous Supervision

Name of Sponsor: Haitong Securities Co., Ltd. Abbreviation of Sponsored Company: Shengmei Shanghai

Name of Sponsor Representative: Zhang Bowen, Li Ling Sponsored Company Code: 688082

Reminder of major events

Approved by the China Securities Regulatory Commission (CSRC) on the Approval of the Registration of the Initial Public Offering of Shares of SEMEI Semiconductor Equipment (Shanghai) Co., Ltd. (Zheng Jian Xu Xu [2021] No. 2689), SEMEI Semiconductor Equipment (Shanghai) Co., Ltd. (hereinafter referred to as "SEMEI Shanghai", "Listed Company", "Company"

or the "Issuer") in its initial public offering of 43,355,753 A shares, par value of RMB1 per share

The issue price was RMB85.00, and the total amount of proceeds was RMB3,685,239,000, and the actual net proceeds were RMB3,481,258,500 after deducting the issuance expenses. The securities were listed on the Shanghai Stock Exchange on November 18, 2021. Haitong Securities Co., Ltd. (hereinafter referred to as the "Sponsor" or "Haitong Securities") acted as its continuous supervision sponsor for the period of November 2021

From December 18 to December 31, 2024.

During the Continuous Supervision Period from 1 January 2024 to 31 December 2024 (hereinafter referred to as the "Continuity

Supervision Period" or "Reporting Period"), the sponsor institution and the sponsor representative shall conduct continuous supervision through daily communication, regular return visits, on-site inspections, due diligence and other relevant provisions in accordance with the Administrative Measures for the Sponsorship Business of Securities Issuance and Listing (hereinafter referred to as the "Sponsor Measures"), the Rules for the Listing of Stocks on the Science and Technology Innovation Board of the Shanghai Stock Exchange, and the Self-Regulatory Guidelines for Listed Companies on the Shanghai Stock Exchange No. 11 - Continuous Supervision, etc., through daily communication, regular return visits, on-site inspections, due diligence and other relevant provisions, and hereby report on the continuous supervision in 2024 as follows:

1. Sponsor institutions continue to supervise their work in 2024

Project work content

1. Establish and effectively implement the continuous supervision system, the sponsor has established, improved and effectively implemented the continuous supervision work and formulated the corresponding work system for the specific continuous supervision work, and formulated the corresponding work for the specific continuous supervision work

Plan. work plan.

2. According to the relevant regulations of the China Securities Regulatory Commission, continue to supervise the work

Before the commencement, sign a continuous supervision agreement with the listed company or relevant parties The sponsor has signed a continuous supervision agreement with the listed company, and the supervision agreement clarifies the rights and obligations of both parties during the continuous supervision period The agreement clarifies the rights and obligations of both parties during the continuous supervision period and reports to the Shanghai Stock Exchange for the record. During the period of continuous supervision, it has been reported to the Shanghai Stock Exchange for the record. If the relevant parties to this continuous supervision agreement make amendments to the content of the agreement, they shall report to the Shanghai Stock Exchange for the record within five trading days after the modification period does not modify the content of the agreement or terminate the agreement. Termination.

agreement, the parties to the agreement shall have five transactions from the date of termination

Report to the Shanghai Stock Exchange within the day and explain the reasons.

3. During the period of continuous supervision, in accordance with the relevant provisions of the listed company, if the listed company does not have a public statement on the matters that need to be publicly issued on violations of laws and regulations, it shall make a statement of violations of laws and regulations before disclosure.

The Shanghai Stock Exchange reports and discloses after review.

4. During the period of continuous supervision, the listed company or relevant parties will come out

If there are violations of laws and regulations, breach of commitments and other matters, the listed company and relevant parties shall report the violations of laws and regulations, breach of commitments and other matters to Shanghai Securities within five trading days from the date of discovery or during the period of continuous supervision.

Yi reported it.

During this period of continuous supervision, the sponsor will communicate and determine the

5. Through daily communication, regular return visits, on-site inspections, scheduled or irregular return visits, on-site inspections, due diligence, etc.,

Continuous supervision work is carried out in the form of job surveys. Carry out continuous supervision of listed companies. Among them, the sponsor machine

Constructed from February 18, 2025 to February 21, 2025

The listed company conducted an on-site inspection.

6. Supervise and urge listed companies to establish and implement standardized operations and commitments Sponsors have urged listed companies to establish and implement standardized operations

Performance, dividend return and other systems. Performance, commitment fulfillment, dividend return and other systems.

7. Supervise the listed company and its directors, supervisors and senior management The sponsor institution continues to supervise and guide the listed company and its directors and personnel to comply with laws, regulations, departmental rules and Shanghai Securities Exchange supervisors and senior managers

Fulfilling the commitments it has made. the requirements of relevant laws and regulations, and earnestly fulfill what they have made

Commitments.

8. Supervise listed companies to establish, improve and effectively implement corporate governance Verify the establishment and implementation of the governance system of listed companies, and the management system, including but not limited to the general meeting of shareholders, the board of directors, the articles of association of the supervisory company, the rules of procedure of the three sessions and other systems comply with the rules of procedure of the board of directors and directors, supervisors and senior management personnel in accordance with the requirements of relevant laws and regulations

Code of Conduct, etc. Relevant governance systems have been effectively implemented.

9. Supervise listed companies to establish, improve and effectively implement internal control

The internal control system of the listed company has been verified, including but not limited to the financial management system and the accounting system, the internal audit system, as well as the use of raised funds and the internal control system of the affiliated city company in accordance with the requirements of relevant laws and regulations. Procedures and rules for major business decisions such as the control of subsidiaries

Wait.

10. Supervise listed companies to establish, improve and effectively implement information disclosure Sponsor institutions urge listed companies to strictly implement the information disclosure system, review information disclosure documents and other relevant documents, review information disclosure documents and other relevant documents, see and have sufficient reasons to believe that the listed company to the Shanghai Stock Exchange "2. The documents submitted by the sponsor institution for the review of the information disclosure of the listed company do not contain false records, misleading statements or situations".

Material omissions.

11. Information disclosure documents for listed companies and to the China Securities Regulatory Commission

For details of other documents submitted by the Shanghai Stock Exchange in advance, please refer to "2. The sponsor institution shall review and review the information disclosure of listed companies, and shall supervise the information disclosure documents in a timely manner if there are problems".

Listed companies make corrections or supplements, and listed companies do not make corrections

or supplement, it shall be reported to the Shanghai Stock Exchange in a timely manner.

12. The information disclosure documents of the listed company were not reviewed in advance

It should be read five times after the listed company fulfills its information disclosure obligations

Within the trading day, complete the review of the relevant documents, and see "2. The sponsor should supervise the listed company in a timely manner in reviewing the information disclosure documents in the information disclosure of the listed company".

Correction or supplementation, if the listed company does not correct or supplement, shall:

Report to the Shanghai Stock Exchange in a timely manner.

13. Pay attention to the listed company or its controlling shareholder, actual controller, and during the period of continuous supervision, the listed company or its controlling shareholder, actual directors, supervisors, and senior management personnel have not been subject to political punishment, regulatory measures or disciplinary actions by the Shanghai Securities Regulatory Commission, and the disciplinary department of the Shanghai Stock Exchange, and urge them to improve the internal control system, take measures, or be issued a regulatory concern letter by the Shanghai Stock Exchange

Corrective measures. Circumstance.

14. Pay attention to listed companies, their controlling shareholders and actual controllers

The performance of commitments, listed companies and controlling shareholders, actually

If the controller fails to fulfill the commitment, it shall promptly report to the Shanghai Certificate

Securities Exchange Report.

The listed company or its controlling shareholder or actual controller makes an undertaking

During the period of continuous supervision of the commitment, the listed company and its controlling shareholder, the specific content of the actual matters, the method and time of performance, and the controller of the performance ability of the sponsor shall not fail to fulfill the commitment.

Analysis, performance risks and countermeasures, and remedial measures in case of failure to perform The listed company or its controlling shareholder or actual controller has made commitments

and other aspects of the full disclosure of information. The specific content of the matter, the method and time of performance, and the ability to perform the contract

The sponsor institution and the sponsor representative shall make full information disclosure on the analysis of commitments, performance risks and countermeasures, and the disclosure of remedies in the event of failure to perform the contract, and continue to follow up on the progress of the relevant entities in fulfilling their commitments.

and urge relevant entities to promptly and fully fulfill their commitments.

Disclosure and performance of listed companies or their controlling shareholders or actual controllers

or change the commitments, do not comply with laws and regulations, listing

rules and other provisions of the Shanghai Stock Exchange

The sponsor representative shall promptly put forward supervision opinions and supervise

Urge relevant entities to make corrections.

15. Pay attention to the reports of public media on listed companies in a timely manner

Verify market rumors. After verification, it was found that the listing was public

There are material matters that should be disclosed but not disclosed or there are no such matters in the listed company during the period of continuous supervision that should be disclosed. If the information is inconsistent with the facts, the listed company should be urged to be truthful in a timely manner

disclosure or clarification; Listed companies do not disclose or clarify

shall report to the Shanghai Stock Exchange in a timely manner.

16. If one of the following circumstances is found, the listed company should be urged to do so

Issued an explanation and made corrections within a time limit, and at the same time reported to the Shanghai Stock Exchange During the period of continuous supervision, the listed company and related entities did not appear

Notice: Matters.

(1) The listed company is suspected of violating the "Listing Rules".

relevant business rules of the stock exchange;

(2) Professional opinions issued by intermediaries and their signatories

There may be false records, misleading statements, or material omissions

Violations of laws and regulations or other improper circumstances;

(3) Article 71 of the Sponsorship Measures,

the circumstances provided for in Article 72;

(4) The listed company does not cooperate with the sponsor to continue to supervise the work

Make;

(5) The Shanghai Stock Exchange or the sponsor institution deems it necessary to report

other circumstances.

17. Formulate an on-site inspection work plan for listed companies, and make it clear that the sponsor has formulated on-site inspection requirements for the on-site inspection work of listed companies, ensure the quality plan of on-site inspection work, and clarify the on-site inspection work requirements. Sponsor in:

Measure. Regular on-site inspections of listed companies by sponsors are conducted annually from February 18, 2025 to February 21, 2025

There should be no less than one on-site inspection by the two sponsor representatives in charge of the project and the two sponsors in charge of the project

At least one person should attend the on-site inspection. One of the delegates participated in the on-site inspection.

18. Focus on whether the listed company has the following matters:

(1) There is a suspicion of major financial fraud;

(2) The controlling shareholder, actual controller and their affiliates are suspected

capital tie-up;

(3) There may be illegal guarantees;

(4) Controlling shareholders, actual controllers and their affiliates and directors

Supervisors, supervisors or senior managers are suspected of embezzlement of listed companies

Benefit;

(5) There are major abnormalities in capital transactions or cash flows; During the period of continuous supervision, the listed company did not have such matters. (6) The firm or the sponsor believes that an on-site inspection should be conducted

and other matters.

In the event of any of the above, the sponsor institution and its sponsor representative shall:

When urging the company to verify and disclose, at the same time should be self-aware or

Within 15 days from the date of knowing about it, a special site shall be carried out in accordance with the regulations

Check. If the company fails to disclose it in a timely manner, the sponsor institution shall do so in a timely manner

Report to the Shanghai Stock Exchange.

19. Identify and urge listed companies to disclose that the listed company and related entities have not had material adverse effects on the company's capabilities, core competitiveness or stability of control during the period of continuous supervision of the company's continuing operations.

Risks or negative matters that affect you, and express your opinion

20. Pay attention to the abnormal fluctuations in the stock trading of listed companies, and supervise that during the period of continuous supervision, the listed companies and relevant entities have not urged the listed companies to perform verification and information disclosure in accordance with the provisions of these rules.

Disclosure and other obligations

21. Carry out special verification of matters that may seriously affect the listed company or the legitimate rights and interests of investors of the listed company and related entities during the period of continuous supervision, and issue such matters.

On-site inspection report

22. In the event of any of the following circumstances in the daily operation of a listed company, during the period of continuous supervision of the sponsor, the listed company and the relevant entities shall not appear in the institutions and sponsor representatives shall conduct relevant matters on the company's operations.

and whether there are other undisclosed significant risks

Expression of Opinion and Disclosure:

(1) The stagnation or emergence of the main business may lead to the main business

stalled major risk events;

(2) Assets are sealed, seized, or frozen;

(3) Failure to pay off debts due;

(4) The actual controller, the chairman of the board, the general manager, and the financial liabilities

The person responsible or the core technical personnel are suspected of committing a crime and are taken by the judicial organs

take coercive measures;

(5) Involving related party transactions, providing guarantees for others, etc

Matters;

(6) The firm or the sponsoring institution deems it necessary to express an opinion

Miscellaneous.

23. If the business and technology of a listed company falls under any of the following circumstances, it shall be guaranteed

The recommending institution and sponsor representative shall check the company on relevant matters

the impact of competitiveness and day-to-day operations, and whether there is any

He did not disclose material risks, issued an opinion and disclosed:

(1) The supply of major raw materials or the sales of products are significant

adverse changes;

(2) The resignation of core technical personnel; During the period of continuous supervision, the listed company and related entities did not appear

(3) Core intellectual property rights, franchise rights or core technologies.

Loss of surgical license, non-renewal or major disputes;

(4) Failure to develop major products;

(5) The core competitiveness loses its competitive advantage or the market emerges

Competitors with a clear advantage;

(6) The firm or the sponsoring institution deems it necessary to express an opinion

Miscellaneous.

The sponsor institution stores and raises funds in a special account for the funds raised by the listed company

Commitments such as the use of funds raised and the implementation of investment projects

24. Continue to pay attention to the establishment of special account storage of raised funds by listed companies, and supervise the company's implementation and implementation of the special system for raising funds, the use of raised funds, the storage system of investment accounts and the supervision agreement on raised funds, in 2025 2

Purpose, implementation and other commitments, for the deposit and use of raised funds on February 18, 2025 and February 21, 2025 to raise funds for listed companies

The situation is inspected on site. The deposit and use of funds were inspected on site and issued

Special verification report on the deposit and use of raised funds

Tell.

25. Listed companies and their controlling shareholders, directors, supervisors, and senior executives

Whether the management personnel have not operated in accordance with the law and have not effectively implemented the situation of protecting the legitimate rights and interests of investors and infringing on the interests of investors during the period of continuous supervision.

condition

In 2024, the sponsor will issue verification opinions as follows:

Under:

26. The sponsor's issuance of verification opinions. On February 29, 2024, the sponsor issued the "Haitong Securities

Co., Ltd. on Shengmei Semiconductor Equipment (Shanghai) shares

2023 Annual Follow-up Report of Continuing Supervision of the Company

Notice;

On February 29, 2024, the sponsor issued the "Haitong Securities

Co., Ltd. on Shengmei Semiconductor Equipment (Shanghai) shares

2023 annual continuous supervision on-site inspection report of the limited company

Notice;

On February 29, 2024, the sponsor issued the "Haitong Securities

Co., Ltd. on Shengmei Semiconductor Equipment (Shanghai) shares

The deposit and use of the raised funds of the company in 2023

Verification Opinions";

On February 29, 2024, the sponsor issued the "Haitong Securities

Co., Ltd. on Shengmei Semiconductor Equipment (Shanghai) shares

The Company confirmed its 2023 annual routine connected transactions and

2024 Verification Opinions on the Estimated Routine Related Party Transactions";

On June 27, 2024, the sponsor issued the "Haitong Securities

Co., Ltd. on Shengmei Semiconductor Equipment (Shanghai) shares

The limited company uses part of the idle raised funds to temporarily replenish it

Liquidity Verification Opinion";

On June 27, 2024, the sponsor issued the "Haitong Securities

Co., Ltd. on Shengmei Semiconductor Equipment (Shanghai) shares

The limited company uses part of the idle raised funds to temporarily replenish it

Liquidity Verification Opinion";

On August 8, 2024, the sponsor issued the "Haitong Securities Shares

Co., Ltd. in relation to Shengmei Semiconductor Equipment (Shanghai) Co., Ltd

The nuclear repurchase of shares by a limited company in a centralized auction transaction

Check the opinions";

On August 8, 2024, the sponsor issued the "Haitong Securities Shares

Co., Ltd. in relation to Shengmei Semiconductor Equipment (Shanghai) Co., Ltd

2024 Semi-annual Follow-up Report of Continuing Supervision of Co., Ltd

Notice;

On August 8, 2024, the sponsor issued the "Haitong Securities Shares

Co., Ltd. in relation to Shengmei Semiconductor Equipment (Shanghai) Co., Ltd

The limited company continued to use idle proceeds for cash management

Verification Opinions";

On October 31, 2024, the sponsor issued the "Haitong Securities

Co., Ltd. on Shengmei Semiconductor Equipment (Shanghai) shares

The limited company uses its own funds to pay for the fundraising project

Verification opinions on the replacement of the required funds with the raised funds";

On November 8, 2024, the sponsor issued the "Haitong Securities

Co., Ltd. on Shengmei Semiconductor Equipment (Shanghai) shares

The initial public offering of restricted shares of a limited company is listed and circulated

Verification Opinions;

27. Problems found by the sponsor and rectification (if any) None.

2. The sponsor's review of the listed company's information disclosure

The continuous supervisors of Haitong Securities reviewed the information disclosure documents of the listed company during the period of continuous supervision in advance or after the fact, including the resolutions and announcements of the general meeting of shareholders, the resolutions and announcements of the board of directors, the resolutions and announcements of the board of supervisors, the relevant reports on the use and management of the raised funds and other temporary announcements, and inspected the content and format of the information disclosure documents and the relevant procedures performed.

After verification, the sponsor believes that the listed company shall disclose information in strict accordance with the relevant regulations of the securities regulatory department, and publicly release all kinds of periodic reports or interim reports in accordance with the law to ensure that the disclosure of all material information is true, accurate, complete and timely, and there are no false records, misleading statements or major omissions.

3. Major risk matters

The main risk factors faced by the company are as follows:

(1) Core competitiveness risks

1. Technology update risk

The semiconductor special equipment industry in which the company is located is a technology-intensive industry, involving many disciplines such as microelectronics, electrical, mechanical, materials, chemical engineering, fluid mechanics, automation, image recognition, communication, software systems, etc., with a high threshold for technology research and development. With the vigorous development of the global semiconductor industry, the technology of the semiconductor industry is changing with each passing day, and the cleaning equipment has higher and higher requirements for the control of wafer surface contaminants to avoid impurities affecting chip yield and product performance. In addition, customers' needs for the types of surface contaminants to be cleaned by cleaning equipment, cleaning efficiency, number of cavities, and applicable technology nodes are also constantly changing. The company has long adhered to the development strategy of differentiated competition and innovation, if it cannot continue to maintain sufficient R&D investment, or the chip process node continues to shrink, or the emergence of new chip manufacturing technology, it may lead to a decline in the company's core technology and related products, which may have an adverse impact on the company's operating performance.

2. The risk of loss of key technical talents

As a technology-intensive industry, technical talents are the key factor that determines the competitiveness of the semiconductor special equipment industry. With the continuous development of the semiconductor special equipment industry in Chinese mainland, the competition for technical talents will continue to intensify. If due to salary or other reasons, the company's key technical personnel are lost, or the company is unable to motivate existing technical talents, or can not attract excellent technical talents, the company may have insufficient technical team allocation, so that it is unable to continue to develop and sell new products, unable to provide customers with high-quality services, the company also

It may face higher recruitment and training costs, which may adversely affect the Company's technology research and development capabilities and operating results.

3. Risk of leakage of core technology

The Company has always attached great importance to the protection of core technologies, but if the Company's or its suppliers' network security systems fail to prevent unauthorized access, sophisticated cyber attacks, or improper handling of sensitive data by the Company's employees and suppliers, etc., resulting in the disclosure of the Company's intellectual property rights and core technologies, the Company may be subject to significant liability claims from customers, resulting in serious damage to the Company's reputation and competitive position, which in turn will adversely affect the Company's business development and operating results.

4. Technology R&D risk

In order to stay ahead of the curve in terms of technology, the company needs to continue to develop new products and improve existing products in the future. The research and development of any new technology and new product requires a long time and a large amount of money. If the company's technology research and development direction can not comply with market demand, technological changes and constantly developing standards, or the company's new products can not meet the customer's requirements for cost, size, acceptance criteria, specifications, performance and delivery cycle, or the company's new products lack of suppliers who can supply key components in a timely manner, the company will face the risk that technology research and development investment can not achieve the expected results.

In addition, certain improvements to the company's equipment products may result in a decrease in customer demand for existing equipment products. Customers' waiting for new products may lead to delays in customers' purchasing behavior, resulting in a decline in the company's current orders, which will affect the company's operating results.

(2) Business risks

1. Market competition risk

The global semiconductor special equipment industry is highly competitively competitive, and the market is mainly occupied by international giants, and the company's products are in direct competition with international giants in the markets they face. Compared with semiconductor special equipment enterprises in Chinese mainland, international giant enterprises have stronger financial strength, technical reserves, sales teams, manufacturing capabilities, sales channels and market awareness, have a wider range of customers and partnerships, and also have a longer business history, richer product series, and wider geographical coverage, which can better identify and respond to changes in market and customer needs. Some international giants are also able to offer bundled discounts for customers who purchase multiple products at the same time.

In recent years, with the continuous growth of China's semiconductor terminal application market, China's semiconductor manufacturing, packaging and testing, materials, equipment and other sub-industries have developed rapidly. The Chinese mainland market is expected to become the main battlefield for global semiconductor equipment companies to compete, and the company will face dual competition from international giants and new Chinese entrants in the future. Compared with international giants, the company's products have a certain gap in terms of applicable technology nodes and market share, and if the company is unable to effectively cope with the competition with such competitors, the company's business revenue, operating results and financial condition will be adversely affected.

2. The risk of market development failure

The company's market development strategy is to first develop the world's leading semiconductor enterprise customers, through long-term research and development and technology accumulation, to obtain their recognition of the company's technology and products, in order to establish the company's market reputation. Then, with the performance and reputation achieved in the international industry, we continue to explore emerging regional markets in the semiconductor industry such as Chinese mainland. The company enables the world's leading chip manufacturers to evaluate and validate the company's technology and products by demonstrating the differentiation, innovation, performance and reliability of the company's equipment to customers. In the process of the company's market development, if these leading chip manufacturers are unwilling to accept and verify the company's equipment products; Or even if these leading chip manufacturers adopt the company's technology and equipment, other chip manufacturers may not accept the company's technology and equipment. There is a risk of failure in the market development of the Company's products, which could have a material adverse effect on the Company's business, results of operations and financial condition.

The sales cycle of a company's products can be very long and uncertain. From initial contact with the customer to the execution of the purchase order, the company's sales cycle is generally one to one and a half years or even longer. Customers' plans to build and expand factories may slow down with the decline in end-market demand, further slowing down or reducing procurement plans, which will affect the final sales of the company's products. In addition, the customer's purchase plan for domestic equipment will also be affected by the delivery of foreign mainstream equipment manufacturers, and opportunities and risks coexist. During the sales cycle, the company will invest a lot of time and money in marketing activities, especially in the promotion of new products, and the product trial cycle is longer, which will have a certain adverse impact on the company's operating results and financial condition.

3. The risk of high customer concentration

According to industry practice, the company's sales are based on the customer's purchase order. The Company does not obtain a binding purchase commitment until the purchase order is officially received. The Company's primary customers may provide the Company with non-binding procurement forecasts, but these forecasts may be changed at any time without notice to the Company. However, since the lead time of the company's products may be up to 6 months, the company may need to open based on non-binding purchase forecasts

We arrange the outsourcing and outsourcing of raw materials and parts, but there is no guarantee that customers will place orders at the time expected by the company. At the same time, the company's customers may also place orders in excess of the forecasted quantity, which can lead to the company not being able to deliver products on time, resulting in lost sales opportunities. In view of the high concentration of the company's customers, if the company's sales forecast for major customers deviates significantly, or if there are major problems in the production and operation of major customers or the financial situation deteriorates, it will have an adverse impact on the company's product sales and timely recovery of accounts receivable.

4. Product quality risk

The semiconductor special equipment industry in which the company is located is a key supporting industry in the semiconductor industry chain, and the quality, technical indicators and operational stability of semiconductor special equipment are particularly important to the quality of chip products. The Company's semiconductor special equipment products are highly complex, may produce defects in the design and manufacturing process, may not meet the specific specifications of customers, and the Company's testing procedures may not be able to detect quality problems in them, which may cause customers to delay or refuse to accept the Company's equipment products, or even to return them; The company may also suffer negative reviews, negative reports and reputational damage from customers, which may lead to a decrease in orders from existing customers and affect the company's development of new customers; The company may also incur additional warranty or service obligations due to product quality problems, resulting in additional costs; In addition, the company may incur losses to customers due to product quality defects, resulting in customer liability claims or lawsuits for the company's products, and the company may need to bear high litigation costs and may also be liable for significant damages. If the above quality problems occur in the company's products, it may adversely affect the company's operating results and market reputation.

5. Market reputation risk

The semiconductor special equipment industry in which the company is located has a high degree of concentration and fierce competition. The company needs to compete with a small number of international semiconductor equipment giants, which have a longer operating history, a more comprehensive product range and a higher market reputation. In this competitive landscape, the value of traditional marketing is limited, and market reputation is crucial. If the company's market reputation is damaged due to product quality accidents, delivery cycle delays, backward technology, untimely services, etc., it will have an adverse impact on the company's operating results and financial condition.

(3) Financial risks

1. The risk of accounts receivable recovery

At the end of the reporting period, the book value of the company's accounts receivable was 2132.2746 million yuan, accounting for 17.58% of the total assets. During the reporting period, the company's accounts receivable amounted to a large amount, which caused a certain working capital pressure on the company. However, the company's main customers are mainstream semiconductor companies at home and abroad, and the overall credit status is good. The Company has made a provision for bad debts on accounts receivable in accordance with the principle of prudence. If the company's accounts receivable is not properly managed or the customer itself has major operating difficulties in the future, it may lead to the company's accounts receivable being unable to be recovered in time, which will adversely affect the company's operating performance.

2. Risk of inventory decline

The company's semiconductor special equipment products need to go through a long verification process to enter the market, and the production stage needs to be prepared in advance according to the order, and the customer needs to complete the acceptance after installation and commissioning after delivery, so the company's raw materials and issued goods have increased with the rapid expansion of business scale, the increase of product types, and the expansion of the scale of orders in hand. At the end of the reporting period, the book value of the company's inventory was 4232.2007 million yuan, accounting for 44.57% of current assets, and the book value of inventory and issued goods was 2039.8639 million yuan, accounting for 48.20% of the book value of inventory.

The Company has difficulty accurately predicting customer demand, and the Company's equipment demand forecasts are based on a number of assumptions, including non-binding forecasts from customers, each of which may cause the Company's forecasts to error, resulting in inventory levels of raw materials and parts exceeding customer demand. or changes in the list of parts or raw materials due to changes in product design schemes, or a decrease in customer orders, may lead to the obsolescence or surplus of some parts and raw materials of the company during the inventory period, resulting in the risk of inventory price decline.

If there is a significant adverse change in the sales price of the product in the future or the issued commodity fails to pass the acceptance on the client and is returned, it may cause the net realizable value of the inventory to be lower than the net book value, and the provision for inventory decline needs to be made, which will affect the company's profitability.

3. Risk of tax incentives

During the reporting period, the company enjoyed the tax incentives of high-tech enterprise income tax and the additional deduction of R&D expenses. If there is a major adjustment to China's laws, regulations and policies related to tax incentives, or because the company cannot continue to obtain the qualification of China's high-tech enterprise in the future or does not meet the conditions for additional deduction of R&D expenses, etc., it will have a certain impact on the company's operating performance.

4. Risk of exchange rate fluctuations

During the reporting period, most of the company's product sales were denominated in US dollars, some raw materials and parts were purchased in US dollars and Korean won, while other raw materials, parts, employee salaries and other costs were denominated in RMB, and the exchange rate of RMB against US dollars and Korean won will have an impact on the company's operating results. During the reporting period, the exchange gain from the company's financial expenses was 12.7239 million yuan. The RMB exchange rate fluctuates with changes in the international political and economic environment, and there is a certain degree of uncertainty. With the continuous expansion of the company's business scale, if the exchange rate of RMB against the US dollar and South Korean won fluctuates violently in the future, it will bring certain uncertainty to the company's performance, which may lead to foreign exchange losses, thereby adversely affecting the company's operating results and financial condition.

5. The risk of fluctuation of gross profit margin

The company provides semiconductor special equipment for semiconductor enterprises such as wafer manufacturing, advanced packaging, semiconductor silicon wafer manufacturing, etc., the company's products show significant customization characteristics, and the product configuration, performance requirements and bargaining power of different customers may be different, and the price of the first order and repeated orders of the same customer may also be different, resulting in a certain difference in the gross profit margin of the company's products. During the reporting period, the gross profit margin of the company's main business was 48.14%, which was relatively stable. If the company's business scale, product structure, customer resources, cost control, technological innovation advantages and other aspects of the future change greatly, or the industry competition intensifies, resulting in the company's product sales price decline, cost increase or customer demand changes greatly, the company will face the risk of fluctuations in the gross profit margin of the main business. Leading technology products can improve the company's gross profit, and the company's high-end process product research and development speed and marketization process will have an impact on the company's overall gross profit.

(4) Industry risks

The semiconductor special equipment industry in which the company is located is a key supporting industry in the semiconductor industry chain, and its demand is directly affected by chip manufacturing, packaging and testing industry and terminal application market. If the macro economy fluctuates violently in the future, resulting in a decline in the demand of end markets such as 5G communications, computers, consumer electronics, network communications, automotive electronics, and the Internet of Things, wafer manufacturing, packaging and testing companies will face a situation of overcapacity, which will lead to a decline in the sales and prices of chip products, and their operating income and profitability will also decline. Wafer manufacturing, packaging and testing companies usually significantly reduce capital expenditures during the industry downturn, and the decline in capital expenditure often exceeds the decline in their operating income, thereby reducing the purchase amount of semiconductor special equipment, which will adversely affect the company's business development and operating performance.

In the boom cycle of the semiconductor industry, companies must increase production to meet expected customer demand, which requires companies and suppliers to increase inventories and expand production capacity. If the company is not able to respond to customers in a timely manner

Rapid growth in demand, or misjudgment of the duration, duration or magnitude of demand growth, may result in the loss of existing customers on the one hand, and cost increases disproportionate to the growth in operating income, which in turn may have a material adverse effect on the Company's business, results of operations, financial condition or cash flows.

(5) Macro environmental risks

In recent years, with the changes in the international political and economic environment and the escalation of international trade frictions, the semiconductor industry has become one of the most obviously affected areas, which has also had an objective adverse impact on the development of China's related industries. The uncertainty of the international political environment may have a negative impact on the semiconductor industry, including reducing the demand for semiconductor special equipment for wafer manufacturing, packaging and testing companies. If the trade policies, tariffs, additional taxes, export restrictions or other trade barriers of the host country deteriorate further, it may adversely affect the production or sales capacity of the Company's customers, deteriorate the operating conditions of the Company's customers, and lead to a decrease in the demand for the Company's equipment products. In addition, if the Chinese government imposes tariffs on raw materials or components purchased from the United States, the company's operating costs will also increase, which in turn will adversely affect the company's operating income, results of operations or financial condition.

(6) Other major risks

1. Management and internal control risks brought about by the company's scale expansion

At the end of the reporting period, the company's total assets were 1,212,845.24 million yuan, and the company's operating income during the reporting period

561,774.04 million yuan. Both the scale of assets and the scale of revenue have achieved rapid growth. However, with the further expansion of the company's assets, business, institutions and personnel scale, the complexity of the company's R&D, procurement, production, sales and other links of resource allocation and internal control management continues to rise, which puts forward higher requirements for the company's organizational structure and operation and management capabilities, and does not rule out the possibility that the company's internal control system and management level cannot adapt to the rapid expansion of the company's scale, which may lead to a decline in the company's operational efficiency, so that the company's cost growth rate exceeds the revenue growth rate, thereby damaging the company's competitiveness. As a result, the company has management and internal control risks caused by the expansion of scale.

2. Risk of intellectual property disputes

The semiconductor special equipment industry in which the company is located is a typical technology-intensive industry, and industry-leading enterprises with technological advantages need to protect their core technologies by applying for patents. The company's business results depend to a certain extent on its own intellectual property system, as well as the company's ability to maintain such intellectual property rights and protect trade secrets, as well as the company's ability to operate without infringing on the patents of others.

The company attaches great importance to the protection of intellectual property rights, helps technical research and development personnel to form patented technological achievements, and at the same time improves the awareness of non-infringement of intellectual property rights of others. If the company is resorted to intellectual property disputes by competitors, or the company's own intellectual property rights are infringed by competitors, it will adversely affect the company's production and operation.

3. The company and its controlling shareholder ACMR are listed on the Science and Technology Innovation Board and the NASDAQ stock market respectively

risk

After the company was listed on the Science and Technology Innovation Board of the Shanghai Stock Exchange on November 18, 2021, it has a controlling stake in the company

East America ACMR is listed on the Shanghai Stock Exchange and the NASDAQ Stock Exchange. The Company and the ACMR in the United States need to comply with the laws, regulations and listing regulatory requirements of the regulatory authorities of the two places at the same time, and the information that needs to be publicly disclosed in accordance with the law shall be disclosed simultaneously in the two places.

Due to the differences in laws, regulations and regulatory philosophies between China and the United States, the Company and the US ACMR are not applicable

The same accounting standards are subject to different regulatory requirements, and there will be certain differences in specific accounting treatment and financial information disclosure. At the same time, due to the differences in the information disclosure requirements of the securities regulatory authorities for listed companies, differences in language, culture and expression habits, as well as differences in the composition and investment philosophy of investors in China and the United States, and different specific conditions of the capital markets, there may be differences between the stock price of the company listed on the STAR Market and the stock price of ACMR in the NASDAQ stock market. This discrepancy, together with the volatility of the US ACMR's stock, may have an impact on the price of the Company's shares listed on the STAR Market.

4. The risk that the company and some of its subsidiaries will be included in the "Entity List".

On December 2, 2024, the U.S. Department of Commerce's Bureau of Industry and Security (BIS) issued a policy on exports and transfers

The new controls on semiconductors moved to China cover advanced integrated circuit (IC) products, equipment and technologies for manufacturing specific integrated circuits, and supercomputers related to artificial intelligence (AI) and advanced computing. According to the new regulations, the company and some of its subsidiaries are included in the BIS Entity List.

According to the U.S. Export Administration Regulations

"EAR"), when a business on the Entity List procures EAR controlled items, its suppliers are required to apply for an export license from the U.S. Department of Commerce in advance. In the future, if the relevant supplier is unable to obtain a U.S. export license, the company and its subsidiaries may not be able to procure EAR controlled items due to their inclusion on the BIS Entity List.

4. Major violations

In 2024, there were no material violations of the company.

5. Reasons and reasonableness of changes in major financial indicators

During the period of continuous supervision, the company's main accounting data are as follows:

Unit: 10,000 yuan

Project 2024 2023 The current period is compared to 2022

Year-on-year change (%)

Operating income 561,774.04 388,834.27 44.48 287,304.55

Net profit attributable to shareholders of listed companies 115,318.81 91,052.20 26.65 66,848.69

moistening

Deductions attributable to shareholders of listed companies 110,884.67 86,767.97 27.79 68,989.28

Net profit from non-recurring gains and losses

Net cash flow from operating activities was 121,614.30 -42,696.37 -26,871.58

forehead

At the end of the period, it was compared to the above

Project End of 2024 End of 2023 End of the same period of the year Increase End of 2022

Less (%)

Net assets attributable to shareholders of listed companies 766,563.51 645,826.57 18.69 552,403.33

give birth

Total assets 1,212,845.24 975,379.77 24.35 817,556.40

During the period of continuous supervision, the main financial indicators of the company are as follows:

Key Financial Indicators 2024 2023 The current period increased from the same period last year in 2022

Less (%)

Basic earnings per share (RMB/share) 2.64 2.09 26.32 1.54

Diluted earnings per share (RMB/share) 2.61 2.05 27.32 1.53

Basic 2.54 2.00 27.00 1.59 after deducting non-recurring gains and losses

Earnings per share (RMB/share)

Weighted average return on equity (%) 16.65 15.19 increased by 1.46 percentage points 12.98

Weighted 16.01 14.47 after deducting non-recurring gains and losses, an increase of 1.54 percentage points 13.40

Average Return on Equity (%)

The ratio of R&D investment to operating income was 14.93 16.93, a decrease of 2.00 percentage points 14.88

（%）

In 2024, the company's operating income will be 561,774.04 million yuan, a year-on-year increase of 44.48%, mainly due to the full

The ball semiconductor industry continues to recover, especially the strong market demand in Chinese mainland, the company has successfully grasped market opportunities and accumulated sufficient order reserves by virtue of its technological differentiation advantages; In this period, the company's sales, delivery, commissioning and acceptance work were efficiently promoted, which effectively guaranteed the steady growth of business performance; The company has further promoted the product platform, continuously improved the technical level and performance of the products, and the product series has become more and more perfect to meet the diverse needs of customers and the market

Increasing recognition has provided strong support for revenue growth; The company has steadily promoted the globalization of customers, continued to increase market development efforts, and actively explored the global market while deepening cooperation with existing customers, successfully realized the expansion of customer base, and promoted the steady increase in operating income.

Net cash flow from operating activities in 2024 will be 121,614.30 million yuan, mainly due to the year-on-year increase

This was due to an increase in sales receipts compared with the previous period and an increase in advance receipts in the current period due to an increase in sales orders.

Sixth, the changes in core competitiveness

The company is mainly engaged in the research and development, production and sales of semiconductor special equipment, the company's megasonic monolithic cleaning equipment, monolithic trough combined cleaning equipment, copper interconnection electroplating process equipment and the differences and core competitiveness of Chinese and international enterprises in the same industry are as follows:

Project Shengmei Shanghai Chinese counterparts International giants

enterprises

Mesonic monolithic cleaning equipment

By controlling the half-wavelength phase between the megasonic generator and the wafer

For motion, the uniform distribution of megasonic energy on the surface of the wafer is realized, which is mainly adopted

It solves the problem of mega cleaning caused by wafer warping in traditional mega cleaning, which is mainly secondary liquid cleaning

Technical characteristics: The problem of uneven sonic cleaning; Fluid cleaning with precise control of megasonic waves in conjunction with nitrogen mist

The output mode keeps the bubbles at a certain size at a controlled temperature Technology The water is physically clear

and the shape of the oscillation, which controls the bubble oscillation in a stable cavitation state wash

Without imploding or collapsing, it solves the traditional megasonic cleaning

Pattern damage caused by the bursting of air bubbles during the process.

SAPS technology has been applied to the logic 28nm technology node and

DRAM 19nm technology node and can be extended to logic chips

28nm, DRAM 18/19nm technology nodes, 32/64-layer 3D

NAND process, high aspect ratio power devices, and TSV deep hole cleaning are the opposite of the company

Wash applications, in DRAM there are more than 70 step applications, while in logic electrical comparison, its ratio, which has been sold

There are nearly 20 applications in the cleaning of technology nodes and FinFET structures; TEBO Technology Cleaning Equipment Cleaning equipment

The downstream covered is mainly for non-destructive cleaning of pattern wafers at 45nm and below, and the technology node is applied to 5nm

At present, the industry has been applied to the 28nm technology node of logic chips, and has been relatively backward and above production

Evaluation of the cleaning process of 18-19nm DRAM process pattern wafers, application fields Line, application field

And it can be expanded to 28nm logic chips and nm-level 3D structures, with a narrower and wider height

Width-ratio DRAM products and multi-layer stacked 3D NAND products

, in DRAM there are more than 70 steps of application, and in logic circuits

There are more than 10 steps in FinFET structure cleaning.

The wafer size is mainly 12 inches, and it can also be used for deep grooves of 8-inch power devices

Cleaning different

Chinese market The Chinese market is relatively large

Market share The Chinese market is high, the international market is low, and the international market is high

monopolize

Monolithic tank type combined cleaning equipment

Compared with the current mainstream monolithic equipment, the use of sulfuric acid can be greatly reduced

Measure; Keep it moist and transfer the wafer to a single wafer with a certain thickness of water film

Technical features: Washing module; Wafer final cleaning in a monolithic cleaning module, - -

The cleaning capacity is better than that of traditional tank cleaning equipment, and can be cleaned with a single piece

The equipment is comparable.

Applications include removal and polishing of polymers and adhesive residues after dry etching

The slurry residue is removed after light, and the photoresist residue is left after ion implantation

The removal of technical nodes and substances, and the removal of organic residues before through holes have been completed

The downstream covered has completed the production line verification of the 40nm and 28nm technology nodes of the logic chip, and there is no such product No such product

Industries and can be expanded to 28nm logic chips, 20nm DRAM and beyond

Technology nodes and 3D NAND with 64 layers and above can be used in 20 steps

and above the cleaning steps of high-temperature sulfuric acid and high-temperature phosphoric acid.

Wafer size 12 inches Mainly No This product No This product

Market share China market is low No This product No This product is not available

Copper interconnection plating process equipment

Using multi-anode local plating technology, the use of precise and controllable power supply and the use of virtual cathode

Do not connect each anode to achieve local electroplating, suitable for ultra-thin seed electroplating technology,

Hole-free plating filling of the crystal layer covering small holes and trench structures; Alone overcome wafer edges

The flow field control system of the vertical electroplating solution can control the margin effect to each anode separately and improve

Technical features: Power supply plating solution, precise control of the fluid field in the plating chamber; Plating Clamps - In-wafer plating

With sealing technology, the uniformity of the contact electrode through the fully enclosed sealing ring; cooperate

Protection, improve process performance and extend the service life of contact electrodes, intelligent water intake

Reduce the cost of process consumables; The modular design of the process chamber increases energy and reduces water ingress

The effective operating time of the equipment. caused by plating

Deposition defects.

Double Damascus

Copper electrochemical deposition process for double Damascus copper interconnect structures: copper interconnect structures

technology nodes and technology nodes from 55nm to 28nm and above; Advanced packaging bumps, copper electrochemical precipitation

Downstream rewiring, through-silicon vias, electrochemical copper plating, nickel plating of the fan-out process, no such product Accumulation process:

Industries Tin, silver, gold, etc. 55 nm to 28 nm

and above technologies

Node.

Wafer size is mainly 12 inches, but it can also be used for 8-inch copper process applications No product No significant difference

Market share The Chinese market is low, there is no market monopoly for this product

As mentioned in the table above, the company has successfully developed the world's first SAPS/TEBO megasonic cleaning technology and single-chip tank combination cleaning technology through differentiated innovation and competition. At present, the company's semiconductor cleaning equipment is mainly used in the cleaning process in the field of 12-inch wafer manufacturing, and there is no competitive gap with similar products of international giant companies in terms of the applicable size of semiconductor cleaning equipment.

Benefiting from the mainland's policy support for the integrated circuit industry and the improvement of local demand, the company's main customers will maintain a high capital expenditure rhythm in the next few years, which will drive the demand for semiconductor manufacturing equipment, including cleaning equipment, to maintain a high boom.

7. Changes in R&D expenditure and R&D progress

In 2024, the company's R&D expenditure is as follows:

Unit: 10,000 yuan

Item Current Year Previous Year Change Range

Expensed R&D investment 72,895.31 61,532.46 18.47%

Capitalized R&D investment 10,952.20 4,303.42 154.50%

Total R&D investment 83,847.50 65,835.88 27.36%

The total R&D investment accounted for 14.93% and 16.93% of operating income, a decrease of 2.00 percentage points

The proportion of capitalization of R&D investment was 13.06% and 6.54%, an increase of 6.52 percentage points

As of December 31, 2024, the Company and its holding subsidiaries have major patents granted

There are 470 patents, including 176 domestic authorized patents and 294 overseas authorized patents, including a total of invention patents

468 items. Such patents that have been granted in China are not subject to restrictions such as pledge or judicial seizure. The list of intellectual property rights acquired during this CPT period is as follows:

The cumulative number of new additions this year

project

Number of applications (pcs) Number of acquisitions (pcs) Number of applications (pcs) Number of acquisitions (pcs)

Invention patents 311 38 1,520 468

Utility model patents - - 3 1

Design patents - - 3 1

Software Copyright - - - -

Other----

Total 311 38 1,526 470

1. The "number obtained" in the "cumulative quantity" is the number of valid patents after deducting the invalid patents;

2. The increment in "Number of Applications" in "Cumulative Quantity" includes the number of patents filed in PCT countries before 2024.

8. Whether the progress of the new business is consistent with the previous information disclosure (if any)

Not applicable.

9. Whether the use of raised funds is compliant

As of December 31, 2024, the cumulative use and balance of the raised funds are as follows:

Unit: 10,000 yuan

Project Occurrence of funds raised

The balance of funds raised in 2023 is 113,600.22

Less: The amount of funds raised during the reporting period was 65,375.87

Less: Handling fee 6.95

Plus: Interest income 4,167.06

The balance of funds raised at the end of 2024 is 52,384.46

As of December 31, 2024, the storage of the special account for raised funds is as follows:

Unit: 10,000 yuan

Bank Name, Bank Account Number, Amount, Remarks

China Merchants Bank Co., Ltd. Shanghai Branch Business 121909929210918 0.13 demand deposits

division

Shanghai Pudong Development Bank Co., Ltd. Huangpu 97080078801900002063 0.01 Demand Deposit

Branch

121909929210202 10,267.78 demand deposits

China Merchants Bank Co., Ltd. Shanghai Huaihai Branch

12190992927900037 8,068.57 Call Deposit

Industrial Bank Co., Ltd. Shanghai North Sub-branch 216420100100156371 49.21 Demand deposit

China Merchants Bank Co., Ltd. Shanghai Branch 121938866210666 2,407.27 demand deposits

division

KB Kookmin Bank Seongnam Hi-tech 67690101272167 0.00 demand deposit

valley Branch

Total - 20,792.97 -

Note: The difference of 315.9149 million yuan between the balance of the special account for raised funds and the actual balance of 523.8446 million yuan is the amount of 90.00 million yuan that the company uses part of the idle raised funds for cash management and the amount of 225.9149 million yuan that temporarily replenishes the working capital.

The deposit and use of the company's raised funds in 2024 are in line with the "Securities Issuance and Listing Sponsorship Business Management Office".

Law", "Regulatory Guidelines for Listed Companies No. 2 - Regulatory Requirements for the Management and Use of Raised Funds by Listed Companies", "Rules for the Listing of Stocks on the Science and Technology Innovation Board of the Shanghai Stock Exchange", "Self-Regulatory Guidelines for Listed Companies on the Science and Technology Innovation Board of the Shanghai Stock Exchange No. 1 - Standardized Operation" and other laws, regulations and institutional documents, the raised funds have been stored in special accounts and used in special accounts, and the relevant information disclosure obligations have been fulfilled in a timely manner, and the specific use of the raised funds is consistent with the company's disclosure. There is no disguised change in the use of raised funds and damage to the interests of shareholders, there is no illegal use of raised funds, and there is no violation of national laws and regulations on anti-money laundering in the management and use of raised funds.

10. Shareholdings, pledges, pledges of controlling shareholders, actual controllers, directors, supervisors and senior management personnel,

Freezing and reduction of holdings

As of December 31, 2024, the controlling shareholder of CM Shanghai is ACM Research, Inc

The number of shares of the company is 35,7692,308 shares, with a shareholding ratio of 81.53%, and in 2024, the number of shares held by the company's controlling shareholders has not changed, and there is no pledge, freezing or reduction of holdings.

As of December 31, 2024, the actual controller, director, supervisor and senior management of Shengmei Shanghai

The shares of the company held by the employees are as follows:

Serial No. Name Position Number of Shares Held (Shares)

1 HUI WANG CHAIRMAN 538,462.00

2 Wang Jian Director and General Manager 360,255.00

3 STEPHEN SUN-HAI CHIAO, DIRECTOR 69,230.00

4 Luo Qianli Director 69,230.00

5 HAIPING DUN DIRECTOR 69,230.00

6 Chen Fuping, Deputy General Manager 302,318.00

7 DEPUTY GENERAL MANAGER OF SOTHEARACHEAV 260,000.00

8 LISAYI LU FENG FINANCIAL OFFICER 260,000.00

9 Luo Mingzhu, Secretary of the Board of Directors 245,483.00

As of December 31, 2024, the actual controller, director, supervisor and senior management of Shengmei Shanghai

There is no pledge, freezing or reduction of the company's shares held by the employee.

11. Whether the listed company has other matters that should be reported to the China Securities Regulatory Commission and the Shanghai Stock Exchange or should be commented on as stipulated in the Sponsorship Measures and the relevant rules of the Shanghai Stock Exchange

After verification, as of the date of issuance of this report, the listed company has no other matters that should be reported to the China Securities Regulatory Commission and the Shanghai Stock Exchange or should express opinions in accordance with the Sponsorship Measures and the relevant rules of the Shanghai Stock Exchange.

(No text below)

(There is no text on this page, it is the signed and stamped page of the "Haitong Securities Co., Ltd. on the 2024 Annual Tracking Report on the Continuous Supervision of Shengmei Semiconductor Equipment (Shanghai) Co., Ltd.")

Signature of the Sponsor Representative:

Zhang Bowen and Li Ling

Haitong Securities Co., Ltd

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