Phison Electronics announced that its wholly-owned subsidiary, Core Storage Electronics, will adjust its equity structure concerning Hefei Zhaoxin and Shenzhen Hongxin Yu.Phison has two deep layouts in mainland China. The first is Hefei Zhaoxin, established in June 2015, which is 100% owned by Phison and primarily engaged in the design, development, and technical services of NAND Flash-related products. The second is Shenzhen Hongxin Yu, a joint venture in which Phison holds over 20%, mainly involved in the trade of storage application products.
Recently, Phison decided to reduce its stake in Hefei Zhaoxin through two steps while increasing its stake in Shenzhen Hongxin Yu to deepen their cooperative relationship.First, Phison will sell part of its 95.49% stake in Hefei Zhaoxin to Shenzhen Hongxin Yu, reducing Phison’s stake in Shenzhen Hongxin Yu to 49.01% after this transaction.Furthermore, Phison will transfer approximately 24.59% of its equity in Hefei Zhaoxin to participate in the acquisition of 54,500 new shares issued by Hongxin Yu. After this transaction, Phison’s stake in Hefei Zhaoxin will decrease to about 24.41%.At the same time, Phison’s stake in Shenzhen Hongxin Yu (including the original holdings) will increase from over 20% to 34.43%.Following this equity restructuring, Shenzhen Hongxin Yu will officially lead the operations of Hefei Zhaoxin. For Phison, it will continue to deepen its market presence in mainland China through its partial equity holdings in both Hefei Zhaoxin and Shenzhen Hongxin Yu.In this transaction, Phison’s Chairman, Pan Jiancheng, also hinted at some thoughts. He stated that since their establishment, Hefei Zhaoxin and Shenzhen Hongxin Yu have assisted Phison in technical services and product sales in the mainland storage market; however, Hefei Zhaoxin has struggled to compete fairly with domestic enterprises due to its “foreign investment” status.In contrast, Shenzhen Hongxin Yu, being a joint venture, meets the conditions of a domestic enterprise, making its business promotion more effective. For this reason, Phison decided to further integrate Hefei Zhaoxin and Shenzhen Hongxin Yu to accelerate the expansion of cooperative relationships with mainland customers and streamline market access.
