China Invests Billions in New Semiconductor Fab

China Invests Billions in New Semiconductor Fab

China has established Beijing Yandong Microelectronics (YDME), a new semiconductor company that will operate a 300mm fab with an estimated cost of $4.6 billion. The facility will produce microelectronics using mature process technologies, including 28nm and above, as reported by the South China Morning Post.

YDME Spearheads Semiconductor Project with Partners

YDME, a state-owned company listed on Shanghai’s Star Market, will play a central role in this semiconductor industry project with a 24.95% stake in the facility. BOE Technology, a prominent display manufacturer and supplier to brands such as Apple, has contributed $277 million for a 10% ownership. Other notable participants include Beijing Yizhuang Investment, Capital Operation and Management, and ZGC Group, who collectively invested $2.765 billion. The remaining funds will be sourced through loans.

Fab to Enhance Beijing’s Chipmaking Ecosystem

YDME’s fab is projected to have a capacity of 370,000 wafer starts per month (WSPM) by 2027, utilizing process technologies of 28nm and older. This facility will significantly bolster China’s aspirations for self-sufficiency in microelectronics production. The nation aims to increase its local chip production rate from 16.7% in 2021 to 21.2% by 2026. Currently, Beijing’s semiconductor infrastructure lags behind the Yangtze River Delta region around Shanghai, which boasts more established manufacturing and back-end processing capabilities. The new fab will strengthen Beijing’s chipmaking ecosystem by enhancing its manufacturing, packaging, and testing resources, enabling the city to compete more effectively in the semiconductor sector.

Project Awaits Approval, Reflects Broader Technology Goals

The project is subject to approval from YDME shareholders and the Beijing State-owned Assets Supervision and Administration Commission. However, expectations are high that these approvals will be granted, aligning with the nation’s broader technology goals. China’s determination to reduce its reliance on foreign semiconductors is evident in the recent announcements from other Chinese companies, including Huahong Semiconductor, China Resources Microelectronics, and Guangzhou ZenSemi, all of whom have plans for 300mm wafer fab projects.