Corporate Value and Return Enhancement Action Plan 2024
Beijing YanDong Microelectronic Co., Ltd.Beijing YanDong Microelectronic Co., Ltd. (hereinafter referred to as the"Company"), to uphold the development concept of an "investor-oriented" listedcompany, safeguard the interests of all shareholders of the Company, and based on theconfidence in the future development prospects of the Company, recognition of thevalue of the Company, and the fulfillment of social responsibility, hereby formulate theaction plan of "Corporate Value and Return Enhancement Action Plan" for the year2024. This plan aims to continuously optimize the standardization of businessoperations and governance, actively reward investors, further enhance the company'soperational efficiency, strengthen market competitiveness, and establish a good imagein the capital market. The main measures are as follows:
I. Focusing on the core business and improving the operational qualityWith the vision of "becoming an outstanding IC manufacturing (integrated circuitmanufacturer) and system solution provider", the company has completed the initiallayout of wafer production lines, adhered to the development direction of More thanMoore, and integrated specialty processes, and followed the development route ofIDM+Foundry. After more than 30 years of development and accumulation, thecompany has formed its own IDM operation mode integrating chip design, waferfabrication, and packaging testing. At the same time, the company focuses on thedevelopment of specialty processes, which can flexibly and quickly support enterprisesto continuously improve product performance, expand product functions, and enhanceproduct competitiveness. The company has a wide range of products, mainly aimed atsix major fields: AIoT (Artificial intelligence of things), new energy, automotiveelectronics, communications, UHD display (ultra-high-definition display), andspecialized applications. In 2023, the company achieved a total operating income of2,126.90 million yuan, a total profit of 455.52 million yuan, and the net profitattributable to the parent company’s shareholders was 452.29 million yuan. Since thecompany’s listing, it has been deeply cultivating its core business, comprehensivelycarried out the lean management infrastructure, promoted the expansion of the scope of
information technology application capabilities, continued to strengthen the productionand scientific research to ensure the foundation, integrated to enhance theimplementation of marketing planning capabilities. In 2024, the company will continueto promote the progress of the tasks in a coordinated manner, and continue to improvethe quality of operations, as follows:
(i) Accelerating the pace of new capacity creepTo achieve the rapid commissioning and efficient operation of the new productioncapacity, the company has formulated a detailed capacity creep plan, carried outpersonnel training and recruitment, ensured the security and stability of the supply chain,introduced automation and intelligent technology, strengthened cross-departmentalcollaboration and communication, continuously improved production efficiency,established incentive mechanisms and policies and flexibly responded to marketchanges. This will help improve the competitiveness and market position of theenterprise and promote sustainable development.
1. Develop a detailed capacity ramp-up plan
Based on the consideration of equipment commissioning, staff training, rawmaterial supply, market demand, etc., formulate a practical mass production ramp-upplan, and further define the tasks and objectives of each stage and the responsibility.
2. Ensuring the security and stability of the supply chain
Establish stable relationships with suppliers to ensure timely supply of rawmaterials, components, and auxiliary materials required for new production capacity,and conduct early assessment and auditing of key suppliers to minimize supply chainrisks.
3. Enhance production automation and intelligence
During the design and construction phase of the new capacity, the companyintroduces advanced automation and intelligent technologies to improve productionefficiency and product quality and uses intelligent monitoring and data analysis toolsto track production in real time, identify problems, and adjust production strategies ontime.
4. Establishment of special incentive programs
Set up special incentive programs for new capacity climbing, such as rewardsystem, grade promotion, title evaluation, etc., to stimulate employees' motivation andcreativity, and provide incentives and commendations to employees and teams withoutstanding performance in the process of climbing.
(ii) Increased capacity utilizationThe company's 6-inch production line is designed to have a capacity of 65,000wafers per month. The 8-inch production line is designed to have a capacity of 50,000wafers per month, and the 12-inch production line is designed to have a capacity of40,000 wafers per month. The company will synergize production process, personnelskills, equipment maintenance, market demand, and other aspects in order to improvecapacity utilization:
1. Optimize business processes
Optimize the production process by improving the production process, reducingthe number of production links, and improving production efficiency. Fully deepen theapplication of various production management systems to further enhance theautomation and intelligence of the production process and improve productionefficiency and product quality;
2. Upgrading personnel skills
Strengthen employee training and education to improve their professional skillsand comprehensive quality, through regular technical training, job rotation, andperformance appraisal, the company stimulates the enthusiasm and creativity of theemployees and improves their work efficiency and product quality;
3. Strengthening preventive maintenance of equipment
Through regular equipment overhaul and maintenance, strengthen the preventivemaintenance of equipment, reduce the frequency of equipment failures, ensure that theequipment is in good operating condition, and further improve the utilization of theequipment;
4. Optimize product mix
According to the market demand, optimize the allocation of resources, furtherdevelop high-value-added products, and continuously improve the utilization rate ofproduction capacity and the efficiency of fixed assets.
II. Emphasize R&D investment, adhere to the leading technology, andenhance core competitiveness
In recent years, the company has continuously increased R&D（Research andDevelopment）investment, mastered independent core technology through continuousinnovation, followed the new trend of global market and technology development,
updated product categories, and enhanced the space for future industrial development.Based on the 6-inch, 8-inch, and 12-inch chip lines, the company has gradually built upa chip manufacturing platform with characteristic processes in the directions of powersemiconductors, ASICs, optoelectronics, and sensors. The company has built variousprocess platforms including planar MOSFET, trench MOSFET, planar IGBT, trenchIGBT, SGT, BCD, MEMS, BJT, TVS, JFET, SBD, FRD, analog, and CMOS ICs, etc.,and the technological nodes cover 0.35 μm, 0.18 μm, 90 nm, and further to 65 nm. Inaddition, "Moore's Law" is approaching its physical limit, in the post-Moore era, thecompany adheres to the development direction of More than Moore and actively laysout in the field of silicon-based optoelectronics and third-generation semiconductors ofSiC and GaN.In 2024, the company will continue to improve its scientific and technologicalinnovation capabilities, focusing on the following areas:
(i) Increasing R&D effortsWith the continuous development of technology in the field of microchips, thecompany is facing more intense market competition, to keep up with the developmentof technology to complete the technology iteration, and continue to improve thecompany's technical strength and product quality, in order to adapt to the increasinglyfierce market environment, to meet the customer side of the ever-changing needs, tocontinue to strengthen the investment in research and development is the company musttake measures.
1. Guaranteeing financial inputs
Fully guarantee the financial input of each key R&D project, provide all kinds ofsoftware and hardware resources needed for the project, and guarantee the smoothprogress of technical product development.
2. Adequate strategic assessment
Prioritize different projects, conduct resource demand and capacity analysis, andevaluate them in terms of the strategic role of the products, ROI, risk, etc. On this basis,resources are deployed to ensure that R&D investment is more reasonable and efficient.
3. Strengthening cooperation between industry, academia and research
Actively conduct joint product development and technology expansion researchwith research institutes, universities, and other research organizations, apply for anddevelop cooperative projects with relevant parties, accelerate the integration of industry,academia, and research and school-enterprise cooperation, jointly explore new
technologies and solutions, absorb the transfer of advanced technological achievementsin the industry, continuously improve the technological advancement and innovation ofthe enterprise, and ensure the effective utilization and transformation of the company'sR&D investment.(ii) Further strengthen the construction of the scientific and technologicalinnovation talent team.
Vigorously introduce industry experts, strengthen their own talent training andteam building, enhance the overall level of the R&D team, while improving the R&Dmanagement incentive system, to create an efficient and executive R&D team, give fullplay to the advantages of R&D personnel, and produce synergistic effects.
1. Talent Recruitment
Actively formulate human resources development strategy, strive to recruit top-tier professionals, highly skilled personnel, and other types of professional andtechnical personnel, and constantly enrich the enterprise science and technologyinnovation talent team.
2. Talent cultivation
Actively coordinate high-quality university resources, based on giving full play tothe synergistic effect of the upstream and downstream of the industrial chain, to openup a talent cultivation pathway, and to establish a joint talent cultivation pattern withuniversities and enterprises.
3. Talent motivation
Increase the rewards for outstanding achievements in scientific and technologicalinnovation, create value, establish and improve the institutional mechanism forrewarding scientific and technological innovation, and stimulate the enthusiasm andinitiative of talents to carry out innovative work around industrial development.
(iii) Strengthening research project management
By improving the existing research project management system, the Companycontinuously standardizes and optimizes the R&D process and builds an efficient andcontrollable R&D management system.
1. Strengthen the construction of a technological innovation management system
Further improve the organizational structure of science and technology innovationmanagement and personnel duties, continuously improve the existing R&D system andoptimize the business process, so that the R&D collaboration process and R&D normsare institutionalized, and continue to improve the ability of all scientific researchers of
the "triple specialization and triple professionalization" capability, which arespecialized on concentration, professionalism, focus, and professionalize onprofessionalism, competence, modernization.
2. Strengthening R&D project management
Before the establishment of the project, the Company carries out sufficient riskidentification and establishes necessary countermeasures to ensure that the project isachieved according to the plan. Gives full play to the means of information technologyto establish an enterprise-level project management information system, establish aneffective online management process for research projects, including the approval ofnew products, time node control, and other processes, and utilizes the means and toolsof information technology to enhance the efficiency of R&D project management andreduce management costs.
3. Develop a detailed plan
Formulate progress plans for R&D projects, strengthen monthly and quarterlysupervision and inspection against the plans, coordinate project resources, and ensurethat scientific research projects are promoted and completed as planned.
4. Strengthening scientific management
Make full use of APQP advance quality planning tools in different stages of R&Dproject planning, execution, summary, etc., sort out the relevant processes and form aneffective APQP list to meet the needs of each stage of the R&D project, andcomprehensively use FMEA, perform risk identification and process documentation atall stages of the project to ensure smooth implementation of R&D projects.
(iv) Developing specialized R&D incentive mechanism
Strengthen the construction of a performance appraisal system for scientificresearch projects, establish a performance-oriented organizational atmosphere, fullymobilize the work enthusiasm and work values of the company's R&D personnel, andensure that the R&D projects are completed on schedule, with high quality andefficiency.
1. The completion of the progress of the research project is linked to the allocationand incentive content of the project manager and the executive team.
2. Evaluate and motivate the company's R&D technicians by linking theparticipation and completion of science and technology innovation projects withpromotion evaluation points, project awards, or honorary recognition.
3. Encourage researchers to actively participate in the declaration of intellectualproperty rights, improve patent rewards, and combine the quantity and quality ofintellectual property rights formed in scientific and technological innovation with theevaluation of promotion and rewards for researchers, so as to improve the enthusiasmof researchers for innovation and stimulate the innovation power of enterprises.
III. Continuous optimization of financial management to improve operationaland capital efficiency
In recent years, the company attaches great importance to financial management,constantly improves the internal control system related to finance, and strengthens theidentification and control of financial risks. The company has empowered financialmanagement with digital means, opened up the interface between the financial systemand the business system, and improved the efficiency of financial operations. Moreover,the Company strengthened the integration of business operation and finance,established the process management mechanism of inventory and accounts receivableand the price management system of procurement and sales, and accelerated theturnover of assets. Reasonable integration of funds and revitalization of stock fundseffectively improved the return on funds. In 2024, the company will further optimizethe financial management mechanism, deeply promote the financial lean managementinitiatives, and continuously improve operational efficiency and capital efficiency.Specific measures are set out below:
(i) Optimize target cost management and enhance product profitability
Within the scope of an annual budget, according to the company's businessobjectives, combining the process characteristics and production flow of each businesssegment, focusing on market changes and customer demand, the company reasonablydetermines the target cost and carries out the decomposition, control analysis,assessment, and evaluation of the target cost, in order to reduce the loss and enhancethe profitability of the products.
(ii) Strengthening the management of "two funds" and enhancing theoperational efficiency of assets
Optimize the customer credit assessment mechanism, strengthen the managementof customer credit accounts, increase the collection of accounts receivable of three yearsand above, and reasonably control the scale of accounts receivable. Strengthen supplychain management, control procurement costs, shorten inventory time, reasonably
reduce the scale of inventory, and improve inventory turnover efficiency.(iii) Deepening the management of funds and bills and enhancing theeffectiveness of treasury managementImplementing monthly rolling budget mechanism, value management of idlefundraising funds and own funds, focusing on the purchase of capital-protectedproducts with high security and strong liquidity and improving the return of funds.Strengthen the management of bills and implement bill pool financing with the help offinancial institutions to ensure the balance of fund liquidity and enhance theeffectiveness of treasury management.
IV. Improving corporate governance and promoting high-qualitydevelopment of the company
The Company attaches great importance to the improvement of its governancelevel and the establishment of a sound internal control system. The powers andresponsibilities of the shareholders' general meeting, the Board of Directors, theSupervisory Committee, and the management layer of the Company are clearly defined,and the Board of Directors has set up four specialized committees, namely, the StrategyCommittee, the Audit Committee, the Nomination Committee, and the Remunerationand Evaluation Committee, to provide advice and recommendations for the Board ofDirectors to make major decisions, so as to ensure that the Board of Directorsdeliberation and decision-making are professional, efficient, fair and reasonable.
In 2024, the Company will continue to improve the corporate governance structureand internal control system, and enhance the standardized operation and scientificdecision-making:
(i) Regulating operations
The Company will strengthen the learning and training efforts for the directors,supervisors, and key position holders to improve their standardized operation andmanagement level and ability to perform their duties, strengthen operational resilience,and continue to increase the Company's core competitiveness, profitability, operationalefficiency and risk prevention and control capabilities, and effectively enhance theeffectiveness of the Board of Directors' governance, decision-making efficiency, andoperational effectiveness. The Company creates a good working environment forindependent directors, strengthens its supervision mechanism, opens an exclusiveoffice, designates the Board of Directors' Office as a communication service
organization, and is specifically responsible for the preparation of materials for meetingmotions, information feedback, etc., which facilitates the independent directors to carryout on-site work for no less than 15 days each year, and provides convenient conditionsfor the work of independent directors. At the same time, the Company will report to theindependent directors on the operation situation and major issues on time and submitrelevant documents to effectively safeguard the right to information of independentdirectors.(ii) Internal governanceThe Company will take into account the latest provisions of laws and regulations,departmental rules of the Securities and Futures Commission, and the business rules ofthe Stock Exchange relating to independent directors and shareholders' returns,accelerate the implementation of the reform requirements of the independent directors'system, optimize the selection and appointment of accounting firms and themanagement of internal audits, revise and improve the relevant management systemand a number of internal control systems, and strictly formulate the relevant approvalprocess, so as to provide a strong safeguard for the legitimate rights and interests of allshareholders. At the same time, the management of the company will take the lead inconducting a comprehensive combing of the internal control system, conduct an in-depth investigation of the potential pitfalls of the Company, and carry out rectificationof the problems found, so as to promote the Company's continuous realization of high-quality development.
V. Focus on shareholder returns and improve investor return mechanismsThe Company attaches great importance to shareholders' return on investment andendeavors to create long-term sustainable value for shareholders and has formulatedand undertaken to strictly comply with the relevant profit distribution policy applicableunder the " Beijing YanDong Microelectronic Co., Ltd. on Shareholders' DividendReturn Planning for Three Years after Listing", "Articles of Association of BeijingYanDong Microelectronic Company Co., Ltd" and other regulations. On September 3,2021, the Board of Directors of the Company considered and approved the profitdistribution policy and the dividend return plan for three years after the initial publicoffering of RMB ordinary shares (A shares) and listing on the Technology andInnovation Board of the Shanghai Stock Exchange. On April 26, 2024, the Companyconvened the Second Meeting of the Second Board of Directors, and considered and
approved the "Proposal on the Company's Profit Distribution Plan for the Year 2023".For the year 2023, the Company proposed to distribute a cash dividend of RMB0.4(inclusive of tax) for every 10 shares to all shareholders. As of December 31, 2023, thetotal share capital of the Company was 1,199,104,111 shares, and the total cashdividend to be paid in this way is 47,964,164.44 yuan (including tax), accounting for
10.6% of the net profit attributable to shareholders of the listed company for the yearof 2023, and the Company will enhance investors' confidence through theimplementation of the cash dividend and other means.
In 2024, the Company will continue to put the needs of its investors at the top ofthe agenda. According to the current stage of development, the current situation of thebusiness, the future development plan to coordinate the dynamic balance betweenbusiness development, performance growth, and shareholder returns, taking intoaccount the long-term development of the Company while ensuring shareholders feelthe fruits of the Company's development, and to establish a "long-term, stable andsustainable" shareholder value return mechanism to enhance investors' confidence inthe Company's development.
VI. Continuously strengthening communication with investors andcontinuously improving the quality of information disclosure
Since listing, the Company has established open, fair, transparent, and multi-dimensional investor communication channels, strengthened exchanges andcommunications with investors through the Shanghai Stock Exchange e-interactiveplatform, investor mailboxes, investor hotline, acceptance of on-site research, and otherforms of exchange and communication, and regularized the holding of performancebriefings after the disclosure of regular reports, to deepen the investors' understandingof the Company's production and operation, and to better convey the Company'sinvestment value. The Company strictly abides by the laws and regulations and theprovisions of the regulatory bodies to ensure that in accordance with the Company'sinformation disclosure management system, the information disclosure obligations arefulfilled in a truthful, accurate, complete, timely, and fair manner, so as to enhance thesense of identity of investors towards the Company and to build up the confidence ofthe market.
In 2024, the Company will continue to communicate the Company's operatingresults and financial condition to investors in a timely, open, and transparent manner
through many channels such as announcements of listed companies, investorcommunication meetings, performance briefing sessions, Shanghai Stock Exchange e-interactive platform, telephone calls, and emails.
VII. Strengthening the constraints on the sharing of benefits betweenmanagement and shareholdersTo strengthen the constraints on the sharing of benefits between management andshareholders, the following initiatives have been developed based on the company'srealities.Following the Company's relevant policy requirements and actual situation, theCompany has formulated the “Management Measures for Professional Managers”, andthe “Management Measures for Performance Assessment of Professional Managers”and other systems. The Company has clarified the mechanism of closely linking theremuneration of the management with the Company's core business indicators, such asbusiness performance and major projects, formulated the annual/term “PerformanceEvaluation Work Plan for Professional Managers”, established a reasonable mechanismfor the payment and distribution of remuneration, and dynamically adjusted theremuneration of the management based on the results of the annual/term performanceappraisal and evaluation. The accountability system for professional managers has beenclearly defined in the “Management Measures for Professional Managers”, the“Management Measures for Performance Assessment of Professional Managers” andthe contractual documents, under which the Company has the right to recover theremuneration paid if the management is found to be responsible for any seriousdereliction of duty and malfeasance of the Company, a serious violation of disciplineand law or decision-making errors that may lead to significant losses of the Company.The "Heads of Affiliated Companies Subject to Party Disciplinary and GovernmentalActions " clearly defines the salary deduction standard of the head of the affiliatedcompany who is subject to Party disciplinary and governmental punishment; if thesalary fulfillment of the current year has been completed, the annual salary will bededucted from the salary fulfillment of the next year by taking the annual salary of theperformance of the fulfillment year as the base.In 2024, following the requirements of deepening the "Science Reform Action",the Company will better integrate organizational performance and individualperformance management, construct a performance appraisal mechanism that matches
the characteristics of the industry and the stage of development, revise the"Performance Management Measures", and formulate an individual performancemanagement plan for 2024. Benchmark the cadre management system of BEHC,promote the contractual management of middle-level cadres under the tenure system,revise and improve the “Interim Measures for Management of Cadre Selection andAppointment”, formulate the implementation plan for the tenure appointment ofmiddle-level cadres, and implement the annual contractual management tasks andobjectives. Continuously improve the contractual management system of topmanagement personnel, establish the index system combining quantitative andqualitative, and the co-existence of operation category and key task category, furtherstrengthen the responsibilities, rights and obligations of management members, sign theannual and tenure appraisal and incentive contract with each professional manager,strengthen the management of target responsibility, and formulate the annualperformance assessment work plan based on the "Management Measures forPerformance Assessment of Professional Managers", the annual performance appraisalwork program was formulated to make it clear that if the performance result of thecurrent year of the term of office is less than 70 points or the annual performanceappraisal score is less than 80 points for two consecutive years, the position will bedismissed; and if the result of the term of office performance appraisal is less than 80points, the term of office performance remuneration will be zero, and the position willbe dismissed. The results of the job performance appraisal are linked to the results ofthe company's party-building appraisal. If the result of the party-building tenureassessment is less than 70 points, and if the result is less than 80 points for twoconsecutive years, the position will be dismissed.
VIII. Strengthening the responsibility of the "key few"To effectively protect the legitimate rights and interests of investors and maximizethe overall interests of the Company, the controlling shareholder of the Company, theactual controller of Beijing Electronics Holdings Co., Ltd, the relevant directors, andsenior management have made the relevant important commitments regarding the lock-up of shares and the commitment to stabilize the share price. The company will continueto pay attention to the fulfillment of the obligations and do a good job of pre-communication to ensure that the relevant commitments are strictly enforced. At thesame time, the Company passes the relevant laws and regulations, the training contents
of the Shanghai Stock Exchange, and other regulatory organizations to the key fewpersonnel on time, and strengthens the learning of professional knowledge.
In 2024, the Company will continue to maintain close communication withdirectors, supervisors, senior management, and other "key few", and actively organizedirectors, supervisors, and relevant staff to participate in the training of the Securitiesand Futures Commission and the Stock Exchange on the governance of listedcompanies, disclosure of information, finance and other related training, and inviteintermediaries such as the sponsoring agency, law firm, etc. to conduct no less thanthree trainings for the directors and supervisors of the Company to learn the relevantlaws and regulations of the securities market. Continuously enhance the awareness ofself-discipline, strengthen the sense of responsibility and fulfillment, and jointlypromote the Company to achieve standardized operation.
IX. Continuous evaluation to improve action programs
The Company will continue to evaluate the specific initiatives of t "CorporateValue and Return Enhancement Action Plan” and fulfill the information disclosureobligations promptly. Moreover, the Company will continue to focus on the mainbusiness, improve its risk management ability, profitability, and core competitiveness,and strive to fulfill the responsibilities and obligations as a listed company through goodperformance, standardized corporate governance, and positive investor returns, so as toestablish a "long-term, stable and sustainable" shareholders' value return mechanism,to return the trust of our investors, and maintain a good market image of the Company.
Board of Directors of Beijing YanDong Microelectronic Co., Ltd.
April 27, 2024