Key facts
- Chinese state funds are increasing support for Hua Hong, the country's second-largest contract chipmaker.
- Investments are directed towards Hua Hong's parent company and a new manufacturing facility in Wuxi.
- The initiative aims to bolster Beijing's drive for self-reliance in mature-node chips.
- Hua Hong plans to invest over $2 billion in a new 12-inch specialty-process foundry line.
- The new Wuxi facility is projected to add 55,000 wafers per month and increase total output by 30%.
- Hua Hong's second-quarter revenue reached a record $717.5 million, with memory revenue showing significant growth.
Chinese state funds are significantly increasing their support for Hua Hong, the nation's second-largest contract chipmaker, by investing billions of yuan into its parent company and a new manufacturing facility. This move is part of Beijing's broader strategy to achieve self-sufficiency in mature-node chip production, especially as the US tightens technology export controls.
Hua Hong, along with its consortium partners, plans to invest over $2 billion in a new 12-inch specialty-process foundry line in Wuxi. This expansion is expected to add 55,000 wafers per month to its production capacity, potentially increasing its total Wuxi output by approximately 30%. The investment will see Hua Hong contribute about $1.043 billion and its subsidiary Shanghai Hua Hong Grace invest around $1.084 billion, together holding a 51% stake in the project company. The registered capital for Wuxi Hua Hong Grace Phase III will be raised to approximately $4.17 billion to fund this development.
The added capacity is intended to address shortages of power semiconductors and specialty analog chips within China. Hua Hong's recent financial performance has been strong, with second-quarter revenue hitting a record $717.5 million, up 26.8% year-on-year. Notably, its embedded non-volatile memory revenue rose 41.8% year-on-year to $200.1 million, and standalone non-volatile memory revenue surged 149.3% to $68.8 million, indicating memory products are a key growth driver. The company's Wuxi Phase II project (Fab 9) is also on track to reach its planned capacity by the end of the third quarter, with all process equipment installed and commissioning underway.