Beijing is investing 33 billion yuan in a state-of-the-art 12-inch wafer plant, a move to enhance China's semiconductor production. Leading firms like YDME and BOE are key players. YDME's 4.99 billion yuan investment secures a 24.95% stake, with other entities contributing to total funding. This project aims to boost Beijing's semiconductor industry. Approvals are pending, while progress is seen in 12-inch wafer fabs. TSMC's actions on 7-nanometer nodes raise concerns among Chinese chip designers.
Beijing has unveiled plans to invest a staggering 33 billion yuan (US$4.6 billion) in the construction of a cutting-edge 12-inch wafer fabrication facility. Spearheaded by state-owned enterprises and funds, this ambitious endeavor signifies a significant stride in China's quest to bolster its domestic semiconductor manufacturing capabilities.
Leading the charge in this transformative project are prominent firms like Beijing Yandong Microelectronics (YDME), a key player listed on Shanghai's Star Market, and BOE Technology, a renowned name in China's display industry.
YDME recently announced a substantial investment of 4.99 billion yuan in Beijing Electronics IC Manufacturing, a subsidiary of state-owned Beijing Electronics Holding overseeing the wafer fab initiative. This strategic move secures YDME a commanding stake of 24.95 percent in the project, reinforced by an acting-in-concert agreement as detailed in a corporate filing.
In parallel, BOE, listed on the Shenzhen stock exchange, revealed its own commitment of 2 billion yuan for a 10 percent ownership share in the venture. Notably, other key contributors include entities linked to Beijing Yizhuang Investment, Beijing State-owned Capital Operation and Management, and ZGC Group. Together, these stakeholders are pooling resources to the tune of 20 billion yuan, with additional funding to be sourced through debt financing.
YDME's recent filing underscores the projected growth of China's integrated circuit (IC) market, anticipating a surge in domestic production to 21.2 percent by 2026 from 16.7 percent in 2021. The company foresees a pronounced demand-supply gap emerging for mature nodes, particularly at the 28-nanometer level or above, with a targeted production capacity of 370,000 wafers per month by 2027.
While Shanghai's Yangtze River Delta region stands as China's hub for chip manufacturing, Beijing has identified a need to bolster its presence in crucial manufacturing and back-end processes like packaging and testing. Through this initiative, Beijing aims to bridge existing gaps and fortify the city's semiconductor ecosystem.
Before the project can proceed, approvals are required from YDME shareholders and Beijing's State-owned Assets Supervision and Administration Commission. Notably, this year has seen notable progress in the construction of 12-inch wafer fabs by companies like Huahong Semiconductor, China Resources Microelectronics, and Guangzhou ZenSemi.
In related developments, Semiconductor Manufacturing International Corporation, the mainland’s pioneer in 12-inch foundry establishment back in 2004, reported full utilization of its capacity in the third quarter. Revenue from 12-inch wafers accounted for a significant 78.5 percent of its total earnings of 15.6 billion yuan for the quarter, with plans to ramp up production by an additional 30,000 wafers per month in the upcoming quarter.
Recent concerns among Chinese chip designers regarding Taiwan Semiconductor Manufacturing Company, the global leader in contract chip manufacturing, have surfaced. There are worries that TSMC might halt 7-nanometer node services for select AI chip clients due to mounting US pressure. In response, TSMC has informed mainland clients about discontinuing advanced chip orders following the discovery of TSMC technology in a product from US-sanctioned Huawei Technologies.
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