Beijing plans 12-inch wafer fab, pouring US$4.6 billion into state-backed chip project

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Beijing plans 12-inch wafer fab, pouring US$4.6 billion into state-backed chip project

Beijing is set to spend 33 billion yuan (US$4.6 billion) building a 12-inch wafer fabrication facility, led by state-owned enterprises and funds, marking another step in China’s efforts to boost domestic semiconductor production

Leading firms involved in the new facility include Beijing Yandong Microelectronics (YDME), which is listed on Shanghai’s Star Market, and BOE Technology, China’s top display maker.

YDME said on Saturday that it will invest 4.99 billion yuan into Beijing Electronics IC Manufacturing, the subsidiary of state-owned Beijing Electronics Holding that is behind the wafer fab project. The deal will give YDME a controlling position with a 24.95 per cent stake in the project, supported by an acting-in-concert agreement, according to a corporate filing.

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In a separate filing on the same day, Shenzhen-listed BOE disclosed that it would invest 2 billion yuan for a 10 per cent stake in the project.

Other participants include affiliates of Beijing Yizhuang Investment, Beijing State-owned Capital Operation and Management, and ZGC Group. Collectively, the shareholders will contribute 20 billion yuan, with the remaining funding to be sourced from debt financing.

BOE Technology is one of China’s largest display and is a supplier to tech firms that include Apple. Photo: Shutterstock alt=BOE Technology is one of China’s largest display and is a supplier to tech firms that include Apple. Photo: Shutterstock>

YDME noted in its filing that China’s integrated circuit (IC) market is expected to reach a domestic production rate of 21.2 per cent by 2026, up from 16.7 per cent in 2021. It expects a significant supply-demand gap emerging for mature nodes, with feature sizes at the 28-nanometre level or greater, and a production capacity of 370,000 wafers per month by 2027.

Compared with the Yangtze River Delta region around Shanghai, China’s chipmaking capital, Beijing lacks sufficient players in manufacturing and back-end processes such as packaging and testing. With the new project, Beijing aims to fill those gaps and enhance the city’s semiconductor industry.

The deal still requires approval from YDME shareholders and Beijing’s State-owned Assets Supervision and Administration Commission.

This year, companies including Huahong Semiconductor, China Resources Microelectronics, and Guangzhou ZenSemi have all announced progress on 12-inch wafer fabs.

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Meanwhile,

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, which established the mainland’s first 12-inch foundry in 2004, reported full utilisation of its 12-inch capacity in the third quarter. Revenue from 12-inch wafers accounted for 78.5 per cent of its 15.6 billion yuan total for the quarter. The company expects to release an additional 30,000 wafers per month in the fourth quarter.

Recently, ******** chip design firms have become concerned that

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, the world’s leading contract chipmaker, might suspend 7-nanometre node services for certain AI chip clients due to mounting pressure from the US. The Taiwanese chipmaker recently told mainland clients that it would

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for advanced chips after TSMC technology was found in a product from US-sanctioned

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