In the evening of November 15, Nanfang Bearing announced that the Company had signed a capital increase agreement with Shanghai Zhencheng Microelectronics Technology Co., Ltd. (hereinafter referred to as "Shanghai Zhencheng"). Nanfang Bearing plans to increase its capital in Shanghai Zhencheng with its own capital of 60 million yuan, of which 10408163 yuan is included in the registered capital, accounting for 51% of its registered capital after the capital increase. After the capital increase, Shanghai Zhencheng will become the company's holding subsidiary and will be included in the company's consolidated financial statements.

Shanghai Zhencheng is a professional fabless integrated circuit design company, focusing on intelligent Internet of Things and intelligent audio wireless connection technology. The main products are wireless Bluetooth series products, image processing chips, cloud computing data processing chips, etc., which have rich accumulation in wireless radio frequency technology, Bluetooth SOC technology, intelligent voice AI technology, noise reduction technology, etc.

As the foundation of the global information industry, the integrated circuit industry has become the cornerstone of the world's electronic information technology innovation. Integrated circuit is widely used in information, communication, computer, consumer electronics, automobile and other fields. Integrated circuit products have a significant impact on people's daily life and consumption patterns. The rapid development of new Internet of Things markets such as smart wearable and smart home also promotes the future development of integrated circuit industry.

Since its establishment, Shanghai Zhencheng has made continuous breakthroughs in technology research and development and product mass production transformation. It has successfully designed nearly 20 chips for streaming. In the past five years, the company has made a total of 8 advanced process SOC chips, each of which has achieved mass production. In 2010, the vehicle borne noise reduction chips developed by Shanghai Zhencheng were successfully mass produced. In 2011, the shipment of Bluetooth chips broke a milestone of 10 million. In 2013, the Bluetooth 2.1 chip and the Bluetooth 4.2G dual-mode chip were certified by the SIG Alliance. In 2019, the Bluetooth 5.0 chip successfully realized the application of TWS wireless headphones. The company actively introduced wireless and AI talents, and redefined smart and audible wearable devices by using ultra-low power wireless RF technology and AI technology on chip. Through the upgrading of advanced chip technology and new technology standards, we will create personalized, ultra-low power consumption, high-quality and ready to use smart products, and at the same time, we will strive to promote the AI technology portal to enhance users' new experience in communication, entertainment, health, safety and AIOT. In the future, Shanghai Zhencheng will strive to become the technology leader and market leader of integrated circuit design in China.

Southern Bearing hopes to make full use of its own strength and advantages through this cooperation. It plans to optimize the allocation of enterprise resources through investment and other ways, continuously expand the size and strength of the enterprise, improve the efficiency of the use of resources and funds, and create good benefits for shareholders. After the completion of this transaction, the company's business will further expand from the bearing manufacturing industry to the integrated circuit industry, which is conducive to expanding the company's business scale, optimizing the company's industrial structure, further enhancing the company's profitability, and has positive significance for the sustainable development of the company.