On the evening of November 25, Yuanjie Technology (688498) issued an announcement that it intends to transfer information to its wholly-owned subsidiary, Yuanjie Technology Pte. Ltd. (hereinafter referred to as "Yuanjie Singapore") increased its capital by no more than 50 million US dollars for its subsidiary Yuanjie USA to build a production base in the United States.

According to the announcement, the above-mentioned project is located in Washington State, USA, and the main construction content covers plant leasing, plant decoration, equipment procurement, etc.

Yuanjie Singapore is a wholly-owned subsidiary of Yuanjie Technology established in Singapore in 2023 with an initial registered capital of US$300,000.

Yuanjie Technology said that the capital increase in the Singapore subsidiary and the construction of a production base in the United States will further expand the overseas market, realize the strategic layout of the global market, and help to get close to the target customer market of the product, and improve the delivery ability and service response ability to overseas customers.

The main products of Yuanjie Technology are optical chips, including 2.5G, 10G, 25G, 50G, 100G and higher rate DFB, EML laser series products and high-power silicon light source products, which are used in the telecommunications market, data center market, vehicle lidar market and other fields. At present, the company has established an IDM full-process business system including chip design, wafer manufacturing, chip processing and testing.

At present, although the main business of Yuanjie Technology is in China, a number of products are directly aimed at overseas markets. It is reported that the company's 10G1577EML optical chip products will be shipped in small batches in 2023 and in the first quarter of 2024. CW light source products are accelerating the expansion of overseas customer markets.

For the layout of overseas production capacity, Yuanjie Technology has previously said that it has been inspected overseas, and will make long-term plans in the future to improve the overseas supply chain and solve the concerns of international customers. With the official announcement of the construction of the US base, the company's overseas production capacity will be accelerated.

In the first three quarters of this year, Yuanjie Technology achieved revenue of 178 million yuan, a year-on-year increase of 91.2%; The net profit was a loss of 550,100 yuan, a year-on-year change from profit to loss. As for the reasons for the loss, the company said that it was mainly due to the relatively high proportion of shipments of negative gross profit products such as 2.5G, which dragged down the comprehensive gross profit margin, and with the intensification of product price competition, the inventory impairment provision increased, and at the same time, the increase in R&D investment in high value-added products such as EML and silicon photonics affected the short-term profit performance.

In the first three quarters, the comprehensive gross profit margin of Yuanjie Technology was 29.69%, a year-on-year decrease of 9.36 percentage points, and the R&D investment was 36.0224 million yuan, a year-on-year increase of 59.18%.

Yuanjie Technology said that it will continue to optimize the product structure in the future, further increase investment and market expansion in the field of data centers on the basis of the original telecommunications market, and at the same time enhance cost control and improve the overall production efficiency and product process optimization.

At present, CW light source products with high gross profit are the potential sectors that Yuanjie Technology strives to build. The company said that due to the development of silicon photonics module solutions, it is expected that the size of the CW light source market will grow significantly next year, and if the CW light source products can successfully enter the international market and establish a good reputation, it will provide more marketing opportunities for the company's other products, including EML products. It is reported that the demand for CW light source products of Yuanjie Technology is good, and batch shipments have been achieved in the third quarter, and it is expected that the revenue will continue to grow in the fourth quarter, and the revenue scale will be further increased in the first quarter of next year.

For the telecommunications business, Yuanjie Technology said that market demand, product structure, and price are the main influencing factors, and the proportion of medium and high-end products will be increased next year, of which 10G EML products are key products for promotion and shipment, and the company has communicated with customers on demand, and the market demand is expected to continue to improve.

China Securities Network Statement: The copyright of all works marked "Source: China Securities Journal, China Securities Network" on this website belongs to China Securities Journal and China Securities Network. China Securities Journal, China Securities Network and the author of the work jointly declare that no organization shall reprint, excerpt or use the above works in other ways without the written authorization of China Securities Journal, China Securities Network and the author.