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.

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.

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.