China Aiming for 'Semiconductor Independence' Invests 6 Trillion Won in 12-Inch Wafer Facility Establishment

State-Owned Enterprises Invest... "Domestic IC Production Share 16.7% in 2021 → 21.2% in 2026"

Chinese state-owned enterprises are set to build 12-inch wafer manufacturing facilities capable of producing high value-added semiconductors, the Hong Kong South China Morning Post (SCMP) reported on the 17th.

Beijing Yandong Semiconductor (YDME), a company listed on the Shanghai Stock Exchange, announced the day before that it plans to invest 4.99 billion yuan (approximately 960 billion KRW) in the wafer fab (semiconductor manufacturing plant) project of Beijing Electronics IC Manufacturing, a subsidiary of the state-owned Beijing Electronics (BEC). Through this, YDME will secure a 24.95% stake in the project, gaining a controlling position.

On the same day, BOE Technology, China’s largest display manufacturer and a company listed on the Shenzhen Stock Exchange, announced it would invest 2 billion yuan (approximately 380 billion KRW), equivalent to a 10% stake in the project. In addition, Beijing Yizhuang Investment, Beijing State-owned Assets Management, ZGC Group, and others are participating in the project. Shareholders plan to invest a total of 20 billion yuan (approximately 3.8 trillion KRW), with the remaining funds to be raised through debt financing, SCMP reported. The total investment amount is 33 billion yuan (approximately 6.4 trillion KRW).

YDME forecasted that the domestic production ratio within China’s integrated circuit (IC) market, which was around 16.7% in 2021, will rise to 21.2% by 2026.

Compared to the Yangtze River Delta around Shanghai, the semiconductor manufacturing hub in China, Beijing has fewer companies in manufacturing and backend processes such as packaging and testing. SCMP explained that the new fab project aims to reduce the gap between Beijing and Shanghai and strengthen Beijing’s own semiconductor industry.

Wafers are disc-shaped substrate materials that form the basis of semiconductor manufacturing. They are produced in various diameters ranging from 1 inch to 12 inches. While 8-inch wafers have been widely used, recently, more emphasis has been placed on 12-inch wafers, which can produce more chips and are advantageous for manufacturing high value-added products.

In China, this year alone, companies such as Huahong Semiconductor, CR Micro, and Guangzhou Jensemi have announced progress in the 12-inch wafer fab sector. SMIC (Semiconductor Manufacturing International Corporation), China’s largest semiconductor company that established the mainland’s first 12-inch foundry in 2004, announced that it fully utilized its 12-inch production capacity in the third quarter.

The announcement by Beijing companies coincides with the timing when TSMC, the world’s largest foundry, decided not to accept orders from Chinese companies under pressure from the United States.

SCMP attributed significance to this as "another step showing China’s efforts to increase domestic semiconductor production."