Suspension Reason Revealed! Egan Sells Nearly 80% of Shanghai Subsidiary Shares, Retains 20%, Shifts Focus to AI, HPC, and Advanced Packaging High-End Testing

The reason for the suspension of Egan Science and Technology (3587), a major semiconductor testing and analysis company, has been revealed. Egan held a board of directors meeting today (31st) and decided to sell nearly 80% of the shares of Egan Technology Testing (Shanghai) Co., Ltd. The actual share transfer consideration is RMB 12.02 billion, approximately NT$56.39 billion. After the cash increase in Shanghai, Egan's final shareholding will be reduced to 20%, and it will lose control of its business in China. In the future, Egan will further concentrate its resources on high-end testing demands driven by AI, high-performance computing (HPC), advanced processes, and advanced packaging, and accelerate the expansion of the global market. Egan stated that the total value of Egan Shanghai's shares corresponding to this transaction is approximately RMB 19 billion, and the transaction price will be paid in cash. After the completion of the transaction, the investment group will hold 80% of the shares of Egan Shanghai, and Egan will retain 20%, meaning that the company is not completely withdrawing from the Chinese semiconductor testing market, but rather changing from directly controlling the operation to retaining part of the shares and participating in the subsequent operating results. According to Egan's major information disclosure, this transaction will be carried out by its subsidiary MA-tek International Inc. (SAMOA) selling 78.4658% of the shares of Egan Shanghai, corresponding to the registered capital of Egan Shanghai of USD 18,439,455. The total transaction amount is RMB 1,224,433,700, approximately NT$563,946 million. At the same time, Egan Shanghai will increase its registered capital by USD 1,802,724. MA-tek International Inc. (SAMOA) has decided to waive all new capital subscription rights. After the completion of the share transfer and cash increase, Egan's shareholding in Egan Shanghai will be further adjusted to 20%. In other words, the "sale of 80% of the shares" mentioned in the press release is the final result after the share transfer and cash increase; RMB 19 billion is the total valuation of all shares of Egan Shanghai, not the actual share transfer price received by Egan. This transaction also triggers an internal structural adjustment of Egan's business in China. Egan Shanghai will first acquire 100% of the shares of Egan Science and Technology (Xiamen) Co., Ltd. from MA-tek International Inc. (SAMOA) for RMB 118 million, and then settle the share sale and cash increase case of Egan Shanghai on the same day, integrating the operating bases in Shanghai, Suzhou, Xiamen, and Shenzhen under the new investment structure. The shares of Egan Shanghai will be sold to Shanghai Egan Jia Enterprise Management Consulting Partnership and Red Peak Limited, neither of which are related to Egan. The investment team behind Shanghai Egan Jia includes Xiamen Municipal Industrial Investment Co., Ltd., Xiamen Municipal Venture Capital Co., Ltd., Shenzhen Kunbo Financial Management Consulting Co., Ltd., Suzhou Industrial Park Yuanhe Wuxi Equity Investment Partnership, and Xiamen Kun Egan Investment Partnership. This also means that Egan is not simply selling its business in China to a single financial investor, but rather introducing a team with local industrial resources and investment background to take over the operation and subsequent market development of Egan Shanghai. After the completion of the transaction, Egan will lose control of Egan Shanghai, and Egan Shanghai and related Chinese subsidiaries will no longer be included in Egan's consolidated financial statements; the 20% shares retained by Egan will be recognized as investment income in the future according to applicable accounting standards. Egan Shanghai has been deeply engaged in the Chinese semiconductor analysis and testing market for many years, providing testing and analysis services for the semiconductor industry chain from raw materials to finished products. Its business covers reliability verification (RA), failure analysis (FA), material analysis (MA), surface analysis (SA), and chemical analysis (CA), and has laboratories and service bases in Shanghai, Suzhou, Xiamen, and Shenzhen. According to the major information disclosure, the total equity in the latest financial statements of Egan Shanghai is approximately NT$35.1 billion, with a profit and loss of approximately NT$2.76 billion; the actual amount invested by Egan in Egan Shanghai so far is USD 23.5 million, approximately NT$7.52 billion. Since Egan Shanghai is the core platform for the group's testing business in China, after the sale of control, Egan's consolidated revenue, profit, and regional operating structure will change, and the subsequent financial impact will also become a market focus. Egan's choice to adjust its business in China at this time also reflects that the focus of competition in the semiconductor testing market is changing. With the continuous development of AI, HPC, advanced processes, and advanced packaging, the computing density, power consumption, and packaging complexity of chips are increasing simultaneously, and the services needed by the market are gradually shifting from general quality verification to higher-level material analysis, failure location, reliability verification, and pre-burn testing. In particular, during the development and mass production of AI chips, the demand for pre-burn testing (Burn-in Test) and related analysis and verification services for high-power, high-performance products has significantly increased, also promoting the investment of laboratories in high-end equipment, technical talents, and R&D capabilities. Egan stated: "This transaction helps to improve the resource allocation and operating efficiency of the group." In the future, the company will continue to invest in the development of high-end analysis and testing technologies, improve the service capabilities of global laboratories, and expand international markets to seize the testing business opportunities brought by the advanced semiconductor industry. Although the share transfer consideration for this transaction is approximately NT$56.39 billion and will be paid in cash, the transaction price is not equal to the disposal profit. Egan stated that since the company will lose control of Egan Shanghai after the completion of the transaction, the actual profit or loss generated by the related transaction still needs to be recalculated after the control is formally transferred, and the exact amount has not been announced yet. Egan has commissioned two independent accountants to evaluate the reasonableness of the transaction. The accountants believe that the overall value of the proposed share sale is within the evaluation value range, and the transaction price is still reasonable; from the perspective of the transaction price and the group's resource integration, global strategic layout and other purposes, it is expected that it will not cause significant adverse effects on the overall equity of Egan's shareholders. This case still needs to obtain the approval of Egan's shareholder meeting and relevant authorities, and it is expected to complete all procedures and handle the settlement before the end of 2026. Citigroup Group serves as the exclusive financial advisor for this transaction, and Dun'an Law Firm and Han Kun Law Firm serve as legal advisors. After the completion of the transaction, in addition to the impact of Egan Shanghai's off-balance-sheet on consolidated revenue and profit, the actual disposal profit, the method of recognizing the retained 20% shares in the future, and how to invest the transaction funds exceeding 56 billion in overseas laboratories, high-end testing equipment, and technology R&D will all be important indicators for observing Egan's next phase of global layout.