Executive Interviews

Asian Metal: Hello, Mr. Yang! Welcome to the interview by Asian Metal. Please introduce the basic situation of your company and your personal experience first.

Mr. Yang: Emeishan Jiamei High Purity Materials Co., Ltd. was founded in February 2001 as a joint venture between Emei Semiconductor Materials Research Institute and American Crystal Technology, Inc. The current shareholders are Zhongjie (Tianjin) Trade Co., Ltd (75% of the registered capital), Beijing Fengying Enterprise Management Co., Ltd and American Xtal Technology, Inc, which is a NASDAQ listed company. The company is the only ultra-high purity arsenic producer in Sichuan Province, which belongs to the high-tech industry supported by the state and is encouraged by the government as the foreign-invested production project. Our main business is the research and development, production and sales of high purity arsenic (5N-7N). Our current plant has an annual production capacity of 24 tons of high-purity arsenic with a monthly output of up to 1.8-2 tons under full operation. We are currently preparing for the construction of a new plant with the designed annual production capacity of 50 tons. The new plant is located in Sichuan and is expected to be completed in 2025, when the new and old factories can be under operation at the same time. I myself have been working in the management position of state-owned enterprises for a long time, and I am familiar with the company's risk control, operation and management. I was assigned to work in Jiamei by the shareholder Zhongjie (Tianjin Trading Co., Ltd.), which is a new challenge for me. I hope that by working together, Jiamei will be able to emerge in the industry of diluted, new and high purity materials, and we welcome all colleagues in the industry to come to our company to inspect and guide our work.

Asian Metal: The mainstream prices of high purity arsenic has been fluctuating at a low level since the beginning of 2023, what do you think are the reasons for it?

Mr. Yang: In fact, from the third quarter of 2022, the market demand for high-purity arsenic began to decrease significantly, down by more than 30% sequentially, especially the demand for high-end high-purity arsenic products fell by more than 50%, the domestic demand for high-end high-purity arsenic in 2023 would reach around 30 tons. In addition, with the new production capacity gradually put into production since last year, the annual production capacity of some producers of high-purity arsenic has reached 50 tons, leading to full competition among producers. In order to reduce inventory and to increase market share, producers lower prices to compete, directly leading to continuous price decline of high-purity arsenic since the first quarter of this year. Finally, the nation's export restriction also has some influence on the weakening prices to some extent.

Asian Metal: How do you see the price trend of high purity arsenic in the rest of the year?

Mr. Yang: Based on the current situation, the demand for 7N high-purity arsenic would not improve significantly in the short term, so the prices of 7N high-purity arsenic before the end of the year may continue to fall with about 20% of decline from the previous year; The demand for 6N high-purity arsenic, due to a wider range of application areas and lower costs, would have a certain degree of increase by the end of the year and it basically could recover to the level of 2022. However, the current 6N high-purity arsenic market has been witnessing unreasonable offers caused by fierce competition among suppliers. So we believe that the prices of 6N high-purity arsenic would remain low in the rest of the year with little room to go down further.

Asian Metal: Compared to the strong demand in 2021 and 2022, how do you see the reasons for the shrunken demand since early 2023?

Mr. Yang: By observing the development of the semiconductor industry over the past years, we reckon that the industry experiences ups and downs almost every 3-5 years. For example, in 2009, 2013 and 2015, the semiconductor industry had been in a downturn due to the gloomy global economy. From 2017 until the first half of 2022, the semiconductor industry market demand was strong. Both producers and consumers maintained normal operation with 3-6 months of inventory or even more. However, discouraged by slow global economic development, epidemic, employment difficulties, low income and other issues highlighted, many people's consumption preferences have changed, namely their preferences of electronic products, for example, changed from the pursuit of fashion to the practicability. So the sales of electronics products such as mobile phones, tablet computers, etc. reduced greatly, resulting in the shrunken demand for high-purity arsenic which is the basic raw material. Most producers maintain low operating rates now while consumers prefer to consume stocks with the operating rates of around 50%.

Asian Metal: How does your company cope with the current dilemma?

Mr. Yang: Jiamei is the earliest producer of high-purity arsenic in China, and we are positioned to produce high-quality high-purity arsenic. With the development of science and technology and technological breakthroughs, the market demand for high-quality high-purity arsenic will become higher and the requirements for the quality will become greater. During the period of weak demand, which we believe would not last long, we just take the opportunity to concentrate on the research and development of high-end products in order to meet the subsequent huge market demand for high-end products.

Asian Metal: Will the demand recover or shrink further in 2024?

Mr. Yang: From the third quarter of 2023, 6N high-purity arsenic market demand witnessed signs of recovery but the trend was not obvious. We believe that the demand is expected to increase by 10-30% in 2024. The demand for 7N high-purity arsenic has not yet recovered but is also expected to grow slightly in 2024 to the level of that in the second half of 2022. At present, some domestic research institutes and gallium arsenide enterprises have invested a lot of money and manpower in the research and development of high-quality gallium arsenide production technology. Once they succeed, the breakthrough will make domestic market get rid of the monopoly of 7N gallium arsenide by foreign enterprises and the demand for 7N high-purity arsenic will rise significantly. We even believe that the domestic demand for ultra-high-purity arsenic would reach 120 tons a year after the break through.

Asian Metal: As the main application field of high purity arsenic, how do you see the outlook of gallium arsenide industry?

Mr. Yang: China gallium arsenide industry is an emerging industry. With the development of science and technology, it is developing faster. Gallium arsenide has excellent electrical properties, thermal stability and high insulation. The state government has invested a lot of money in recent years to accelerate the development of the semiconductor industry, which provides a good environment for the development of the gallium arsenide industry that has witnessed continuous expansion. At the same time, foreign enterprises have established a large number of gallium arsenide factories for the large-scale gallium arsenide production in China, which improves the gallium arsenide market scale. In addition, the government has also taken a series of measures to promote the development of the gallium arsenide industry, for example, the government has invested a lot of money in the research and development of science and technology, and also has provided preferential tax policies to support the enterprises to develop new technologies. It is expected that the market scale of China's gallium arsenide industry will continue to grow at a rate of 10-20% in the next few years.

Asian Metal: Does your company has any plan of diversified product management and industrial chain extention?

Mr. Yang: Since its establishment in 2001, Jiamei has been focusing on the research, development and production of high-quality high-purity arsenic, and the quality of our products is comparable to that of the world's top producers of high-purity arsenic, but the company's development is limited by the problems of low production capacity and single product, so it has not been better developed so far. After the successful reorganization in 2023, the company aims to gain the leading positions in the rare and scattered materials industry and compound semiconductor industry. By implementing large-scale production of normal and ultra-high-purity rare and scattered metals, compound semiconductor materials, and ultra-high-quality wafer end-products, the company will breakthrough the restrictions of overseas export countries and will fill the gap in China, so that we could meet the jumping demand from chip materials markets in the recent and coming years.

Asian Metal: Thank you for your sharing. We wish you and your company further success!

Mr. Yang: Thank you very much!