On the evening of January 16th, LuXiao Technology issued an announcement announcing a major adjustment: the company plans to significantly reduce the total investment amount for the "Third-Generation Power Semiconductor (Silicon Carbide) Industrial Park Project" from 1.94 billion yuan to 990 million yuan, a reduction of nearly half. What is even more noteworthy is that the 950 million yuan of surplus funds raised will be used to permanently replenish the company's working capital.

In August 2020, LuXiao Technology signed a "Strategic Cooperation Framework Agreement" with the People's Government of Changfeng County, Hefei City, intending to jointly invest in the construction of a third-generation power semiconductor (silicon carbide) industrial park in Changfeng County. The main focus is to build an internationally leading research and development and production base for the industrial chain of third-generation power semiconductor (silicon carbide) equipment manufacturing, crystal growth production, substrate processing, epitaxial fabrication, etc. The total investment for the project is 10 billion yuan, with a first-phase investment of 2.1 billion yuan.
However, for over five years, LuXiao Technology has failed to complete even one phase of investment.
According to the announcement, the board of directors of the company has reviewed and approved a proposal to adjust the investment scale of the "Third-Generation Power Semiconductor (Silicon Carbide) Industrial Park Project" (Phase I). It is proposed to adjust the total investment amount from 2.1 billion yuan to 1.15 billion yuan, and the total planned investment amount from the raised funds from 1.94 billion yuan to 990 million yuan.
Regarding the surplus raised funds amounting to RMB 950 million, Lu Xiao Technology plans to change their purpose to permanently supplement working capital. The company stated that this move is aimed at "improving the efficiency of the use of raised funds and fully ensuring the company's daily operating needs for working capital.".
In its announcement, LuXiao Technology provided a detailed explanation for its decision. Since the planning of the project, significant changes have occurred in the overall competitive landscape of the industry and the market environment. Firstly, the competition in the 6-inch conductive silicon carbide substrate market has become increasingly fierce. Driven by national industrial policy support and downstream market development expectations, the global silicon carbide substrate manufacturers have accelerated their capacity expansion, leading to a rapid release of production capacity for 6-inch products.
However, since 2024, due to factors such as the macroeconomic environment and adjustments in new energy policies in Europe and the United States, the growth rate of the global new energy vehicle market has slowed down. Downstream automakers have shown weak demand and continue to leverage their bargaining power to drive down product prices. Meanwhile, although demand in other application areas such as photovoltaic inverters and rail transit is growing, it is difficult to absorb the huge substrate production capacity in the short term. In addition, the successive launch of larger-sized silicon carbide substrates such as 8-inch ones has also posed technical and market challenges to 6-inch products.
Luxiao Technology believes that, against this backdrop, continuing to invest heavily in construction as originally planned would significantly increase the company's fixed costs and operational risks, which is not in line with the company's long-term interests. The company assesses that the production capacity after adjusting the investment scale is expected to meet the current development needs, eliminating the need for further investment as per the original plan.