Fujian San’an Optoelectronics Co., Ltd. (referred to as San’an Optoelectronics), controlled by Lin Xiucheng, has recently been placed under detention.
According to the announcement made on March 22 by China’s leading LED chip company, San’an Optoelectronics, it was notified on March 21 by the controlling shareholder Fujian San’an Group Co., Ltd. that the actual controller Lin Xiucheng has been placed under custody and is under investigation by the National Supervisory Commission of the People’s Republic of China.
First Financial Daily reported that San’an Optoelectronics hit the limit down on March 23, with its stock price falling by 9.98% to 14.89 yuan per share (RMB, the same below), reducing its market value from over 80 billion yuan to 74.29 billion yuan.
Public information indicates that San’an Optoelectronics, headquartered in Xiamen, Fujian Province, is mainly engaged in the research, development, production, and sales of compound semiconductor materials and equipment.
Lin Xiucheng is the founder of San’an Group. In the 1980s, he made his first fortune through the acquisition of scrap steel and corner material trading. In 1999, he ventured into the semiconductor field and established San’an Optoelectronics the following year. In 2008, San’an Optoelectronics was listed on the Shanghai Stock Exchange through a backdoor listing and became a leading enterprise in the domestic LED chip industry. Lin Xiucheng was once known as the “LED King” of China.
In July 2017, Lin Xiucheng resigned, and his 43-year-old son Lin Zhiqiang took over as chairman. The “2026 Hurun Global Rich List” shows that Lin Xiucheng and Lin Zhiqiang ranked third on the rich list in Xiamen with a wealth of 16 billion yuan.
Industry speculation suggests that Lin Xiucheng’s detention this time may involve issues such as illegal fund embezzlement from years ago. According to Securities Times, nine years ago, issues of fund irregularities involving San’an Group were exposed.
According to the criminal judgment document “First Instance Criminal Judgment of Zheng Yunfeng for Bribery” published on China Judgements Online, between 2003 and 2010, Lin Xiucheng bribed Zheng Yunfeng, then Secretary of the Siming District Committee and District Mayor of Xiamen, a total of 1.5 million yuan, $20,000, and shopping cards worth 75,000 yuan to obtain enterprise tax refunds and land for the company headquarters. Zheng Yunfeng fell from grace in 2016 and was sentenced in 2019.
In addition to Zheng Yunfeng, Lin Xiucheng had a close relationship with Wang Sanyun, then Deputy Secretary of the Fujian Provincial Party Committee. At the end of 2007, Wang Sanyun was transferred from Fujian to Anhui as the provincial governor and in 2010 brought San’an Optoelectronics to Anhui. According to First Financial Daily, during Wang Sanyun’s tenure, in addition to receiving high government subsidies, many orders related to the government were sold to the government at high prices without going through the procurement bidding process, all of which were intricately linked to Wang Sanyun.
For example, in December 2010, San’an Optoelectronics and U.S. company EMCORE established a joint venture in Huainan, with the Huainan municipal government agreeing to provide the enterprise with at least 1,600 mu of industrial land (in two phases), 500 million yuan in fiscal subsidies, and after the company’s production, subsidies of 1.4 yuan per watt sold up to a total of 1,000 MW, totaling 1.4 billion yuan in subsidies.
Moreover, within three years of San’an Optoelectronics settling in Anhui, they also received over 2.5 billion yuan in government LED streetlight orders from Wuhu, Huainan, and other places.
At that time, the mayor of Wuhu, Chen Shulong, in order to please Wang Sanyun, who had just taken office, and seek political capital, under the guise of investment promotion, provided a large number of policy incentives and financial support to enterprises associated with Wang Sanyun.
Public data shows that since San’an Optoelectronics settled in Wuhu in 2010, they received a total of 2.5 billion yuan in government subsidies by the end of 2011 when Chen Shulong left Wuhu. In 2010, the government subsidy was approximately 700 million yuan, in 2011, the final year of Chen Shulong’s rule in Wuhu, the government subsidy received by San’an Optoelectronics more than doubled to 1.829 billion yuan.
At the end of 2016, Chen Shulong fell from grace, and in mid-2017, Wang Sanyun was investigated. San’an Optoelectronics also reached a turning point in its fate. The annual report of San’an Optoelectronics shows that government subsidies in 2017 decreased from an average of 500 million yuan per year to 3 million yuan. In the mid-year report of 2018, government subsidies were only 2 million yuan, and the share of net profit had decreased from 90% in 2011 to 0.11%.
Furthermore, according to Caixin, Hu Henghua, mayor of Chongqing, was announced to be under investigation on March 20 this year, having shown support for San’an Group projects during his tenures in Changsha and Chongqing.