Mulinsen signed a 1.5 billion yuan cooperation agreement with Huacan Optoelectronics

Mu Linsen announced on the evening of the 10th that the company had recently signed a "Strategic Cooperation Agreement" with Huacan Optoelectronics Co., Ltd. (hereinafter referred to as "Huacan Optoelectronics"). After friendly consultations, the two parties established a strategic partnership with the goal of mutual benefit and win-win.

The agreement shows that Mulinsen will give priority to purchasing Huacan Optoelectronics products under the same conditions. Mulinsen will purchase LED chip products from Huacan Optoelectronics worth no less than 1.5 billion yuan in the next three years. Product prices and quantities are adjusted regularly based on market demand on a quarterly basis. Huacan Optoelectronics will give priority to ensuring the supply of Mulinsen. At the same time, taking into account the large scale of Mulinsen's single product procurement, Huacan Optoelectronics promises to provide Mulinsen with the best price protection. Huacan Optoelectronics will do everything possible to ensure that Mulinsen's supply quantity reaches the target. Measures include: accelerating investment and construction of a new factory in Yiwu; accelerating the expansion of chip manufacturing capacity at the Suzhou factory; transforming production equipment at the Wuhan factory to increase chip production, etc. Huacan Optoelectronics promises that Mulinsen will receive priority in the allocation of the new production capacity released after the new Yiwu plant is put into operation, ensuring Mulinsen's expanding demand for LED chips in the future.

The company stated that Huacan Optoelectronics is the leading domestic LED chip supplier and has always been committed toCommitted to the research and development, production and sales of full-color high-quality LED epitaxial materials and chips, it has internationally leading technology research and development capabilities and mature production processes. The company carries out strategic cooperation with it to implement large-scale procurement of chips, thereby obtaining lower chip prices and establishing a good long-term cooperative relationship, stabilizing the company's chip supply channels and effectively reducing chip procurement costs. The company's scale advantage is outstanding. Corresponding to the scale of production, the company implements large-scale procurement of chips, which effectively improves the company's bargaining power in chip procurement and reduces chip procurement costs. On the other hand, large-scale chip procurement can quickly replenish inventory. Once it is found that chip supply is tightening and prices rise, the company can stock up in advance and lock in prices to maximize the stability of chip prices and reduce the adverse impact of chip price fluctuations on the company's production and operations. The company has a rich series of LED packaging products, a wide product coverage, and a wide range of acceptable chip specifications in production. Through large-scale procurement of chips, chip companies with different specifications, models and performances can make reasonable use of them. The utilization rate of chips is high, which reduces the waste of chips and effectively controls the cost of chips.

In March this year, Mulinsen Co., Ltd., a wholly-owned subsidiary of Mulinsen, signed a letter of intent to acquire Ultra-era Light Source with Yan Jianguo on March 23, 2016. Mulinsen Co., Ltd. intends to purchase 8 shares of Super Times Light Source held by Yan Jianguo in cash.0% equity. The transaction price has been initially determined by both parties, and the value of 80% of Super Times Light Source's shares is 300 million to 350 million yuan.

At present, the LED industry is showing vertical and horizontal integration. In order to further extend the industrial chain and create synergy, many LED manufacturers have extended to the upstream and downstream industrial chain areas, or enhanced their competitiveness through upstream and downstream mergers and acquisitions. Huacan Optoelectronics said that this cooperation will promote the company's LED chip technology to continue to mature in the process of industry competition and achieve technological breakthroughs in the high-end chip field.

Mu Linsen also said that the company's large-scale procurement of chips can effectively improve the bargaining power of chip procurement and reduce chip procurement costs. Large-scale chip procurement can quickly replenish inventory. Once it is found that chip supply is tightening and prices are rising, the company can stock up and lock in prices in advance to ensure the stability of chip prices to the greatest extent and reduce the adverse impact of chip price fluctuations on the company's production and operations.