News Release: Ferrotec Holdings Corporation(6890 TSE Standard)
July 18, 2024

Notice of the Establishment of a New Metal Processing Company (Specified Subsidiary) in
Changshan, China, the Increase in Capital in an Existing Subsidiary, the Conversion of an
Existing Subsidiary to a Specified Subsidiary and Capital Investment (Construction of a New
Factory)

Ferrotec Holdings Corporation (Representative Director: He Xian Han; hereinafter “the Company”) announces that, at themeeting of the Board of Directors held yesterday, we resolved to establish a new company whose main business will be metal
processing (hereinafter “the new company”) through a joint venture between our subsidiary Zhejiang Advanced Precision
Machinery Co., Ltd. (hereinafter “FTAP”) and a Changshan Government-invested company and to construct a new factory inChangshan. Details are as follows.
The new company will be our consolidated subsidiary, whose capital will exceed 10% of our capital, so it will correspond to aspecified subsidiary. Therefore, we make this disclosure. Moreover, we announce that FTAP will also convert into a specified
subsidiary with the increase in its capital of 100 million yuan due to this matter.
1. Background and purposes
There has been remarkable growth in locally-owned semiconductor equipment manufacturers in China in recent years in thesemiconductor manufacturing equipment market. This growth has also supported equipment demand even in the adjustment
phase in 2023. It is expected that this demand will remain strong from this year and onward. It is assumed that it will accountfor a large portion of global demand.
We have built mass production bases in China and supplied products globally over the past 30 years. At the same time, wehave built extremely good relationships with local semiconductor equipment manufacturers in China, including major
manufacturers. Against this backdrop, semiconductor equipment manufacturers in China have been asking their suppliers,
including the Company, to focus on improving production capacity – in particular, vacuum chamber processing capacity andassembly capacity – to ensure they can continue to enjoy high growth in the future.
We have been certified by many customers at our existing metal processing factories (Hangzhou and Changshan).
Nevertheless, we are unable to meet all customer demand at the present time. In particular, we have considered how to cover
the shortfall in capacity for large vacuum chamber processing and equipment assembly in the future. As a result, we havedecided to increase our production capacity for metal processing in Changshan. This will enable us to increase our share of themarket for local manufacturers in China.
We will construct the factory in collaboration with our subsidiary Hangzhou Dahe Thermo-Magnetics Co., Ltd. (FTH).
In addition, we expect to obtain various preferential policies and support (including fixed asset subsidies and loan interestsubsidies) from the Changshan government in this project.
2. Increase of capital of our subsidiaries(1)

FTAP (Zhejiang, China)

New company (Zhejiang, China)

140.87 million yuan-Current capital(approx. 3.1 billion yen)
(2)
(3)

Capital increase to be

100 million yuan

100 million yuan

implemented this time

(approx. 2.2 billion yen)(approx. 2.2 billion yen)Registered capital

240.87 million yuan

100 million yuan

after capital increase(approx. 5.3 billion yen)(approx. 2.2 billion yen)

*Exchange rate: 1 Chinese yuan = 22.16 yen*The increase in capital is subject to obtaining approval from the Chinese regulatory authorities.
3. Overview of the capital investment (new factory)(1)

Investment amount

266.23 million yuan (approx. 5.9 billion yen) *1 Chinese yuan = 22.16 yen
FTH: 72.43 million yuan (approx. 1.6 billion yen)
New company: 193.80 million yuan (approx.4.3 billion yen)(2)

Total floor area of theApprox. 58,000 m2

News Release: Ferrotec Holdings Corporation(6890 TSE Standard)building(3)

Schedule

Start of construction: August 2024
Completion of the building: July 2025
Equipment installation: October 2025

(4)

Scheduled date of start ofDecember 2025

operation
4. Outline of our subsidiaries
1) New company (specified subsidiary)
(1)

Name

Ferrotec (Zhejiang) Semiconductor Material Co., Ltd.

(2)

Address

No. 2 Longjiang Rd., Changshan, Quzhou City, Zhejiang Province, People’s
Republic of China(3)

Title and name of

He Xian Han, Representative Director

Representative(4)

Contents of business

Design, manufacturing, and contract processing of precision parts forsemiconductor equipment, etc.

(5)

Capital

305 million yuan (approx. 6.8 billion yen) *1 Chinese yuan = 22.16 yen*Capital at the time establishment is 100 million yuan (approx. 2.2 billion yen).

(6)

Date of establishment

July 2024 (planned)
Shareholders

Shareholdingratio(7)

Major shareholders andshareholding ratio

Zhejiang Advanced Precision Machinery Co., Ltd.

83.6%

(FTAP)
Changshan Government-invested company (under

16.4%

adjustment)

Relationship between(8)

Ferrotec (Zhejiang)
Semiconductor Material Co.,
Ltd. and the companiesCapitalFerrotec (Zhejiang) Semiconductor Material Co., Ltd. is arelationshipsubsidiary 83.6% of whose voting rights are held by FTH, aconsolidated subsidiary of the Company.

Personnel

The representative director and president of the Company

relationshipwill concurrently serve as director of the subsidiary.

Business

Nothing is applicable.

relationship
2) FTAP as of June 30, 2024 (converted into a specified subsidiary)
(1)

Name

Zhejiang Advanced Precision Machinery Co., Ltd. (FTAP)(2)

Address

No.7 Longjiang Rd., Xindou Industrial Development Zone, Changshan,
Quzhou City, Zhejiang Province, People’s Republic of China(3)

Title and name of

He Xian Han, Representative Director

Representative(4)

Contents of business

Design, manufacturing, and contract processing of precision parts forsemiconductor equipment, etc.

(5)

Capital(6)Date of establishment

140.87 million yuan (approx. 3.1 billion yen) *1 Chinese yuan = 22.16 yen
March 18, 2014
Shareholders

Current

After capitalincrease(7)

Major shareholders andshareholding ratio

Hangzhou Dahe Thermo-Magnetics

93.0%

95.9%

1.7%

1.0%

Co., Ltd. (FTH)
Advanced Automation Technology(Hangzhou) Co., Ltd.

News Release: Ferrotec Holdings Corporation
Capital relationship(6890 TSE Standard)

FTAP is a subsidiary 93.0% of whose voting rights
are held by FTH, a consolidated subsidiary of the(8)Relationship between FTAP
and the companies

Company.
Personnel relationshipThe representative director and president of theCompany concurrently serves as director of thesubsidiary.

Business relationshipNothing is applicable.

(9) Financial position and operating results in the past three years (unit: thousand Chinese yuan) *Yen conversion: 1Chinese yuan = 22.16 yen
Fiscal year

FY12/2021

FY12/2022

FY12/2023

Net assets

172,544

307,176

312,642(Approx. 3.8 billion yen)(Approx. 6.8 billion yen)(Approx. 6.9 billion yen)

Total assets
Net asset per share (yuan)
Net sales
Net income

430,767

771,082

741,398(Approx. 9.5 billion yen)(Approx. 17.1 billion yen)(Approx. 16.4 billion yen)

3.45

2.18

2.22

(Approx. 76 yen)(Approx. 48 yen)(Approx. 49 yen)

412,899

467,571542,299(Approx. 9.1 billion yen)(Approx. 10.4 billion yen)(Approx. 12 billion yen)

46,42543,7585,466(Approx. 1 billion yen)(Approx. 1 billion yen)(Approx. 0.1 billion yen)---

Dividend per share
3) FTH as of June 30, 2024
(1)

Name

Hangzhou Dahe Thermo-Magnetics Co., Ltd.

(2)

Address

No.777 Binkang Rd., Binjiang, Hangzhou City, Zhejiang Province, People’s(3)

Title and name of

He Xian Han, Representative Director (Representative Director, President andRepresentative

Group CEO of the Company)

Republic of China(4)

Contents of business

Semiconductor Equipment-related Business, Electronic Device Business, etc.

(5)

Capital1,615.49 million yuan (approx. 35.8 billion yen) *1 Chinese yuan = 22.16 yen(6)Date of establishment

January 31, 1992

Major shareholder andFerrotec Holdings Corporation: 100%

(7)

shareholding ratio
CapitalA wholly-owned consolidated subsidiary of the Company

relationship(8)

Relationship between FTH

Personnel

The representative director and president of the Company

and the Company

relationshipconcurrently serves as director of the subsidiary.

Business

Purchase agency business and debt guarantee

relationship
5. Outline of the joint venture investor (Government-invested company)
(1)

Name

Changshan Government-invested company (under adjustment)(2)

AddressQuzhou City, Zhejiang Province

6. Future outlook
The impact on the business performance of the Company for the current fiscal year through this matter is expected to beminor. However, we will promptly disclose relevant items as soon as they are confirmed.