China Resources Microelectronics Leads Beijing's US$4.6 Billion Semiconductor Project

China's Major Semiconductor Manufacturing Initiative

Beijing is set to spend 33 billion yuan (US$4.6 billion) on a new 12-inch wafer fabrication facility, highlighting the commitment to bolster domestic semiconductor production. This project is backed by a coalition of state-owned enterprises, including Beijing Yandong Microelectronics (YDME) and BOE Technology, the top display manufacturer in China.

Key Players in the Project

• Beijing Yandong Microelectronics (YDME) will lead with an investment of 4.99 billion yuan, securing a controlling 24.95% stake.
• BOE Technology is committing 2 billion yuan for a 10% stake.
• Additional backing comes from Beijing Yizhuang Investment, Beijing State-owned Capital Operation and Management, and ZGC Group.

Collectively, these shareholders will put forth 20 billion yuan, sourcing the remaining funding through debt financing. The initiative is projected to raise China's integrated circuit (IC) production rate to 21.2% by 2026, addressing a critical supply-demand gap for mature production nodes.

Strategic Importance of the New Facility

Compared to the Yangtze River Delta region, Beijing is currently under-resourced in chip manufacturing and testing operations. This project aims to rectify that imbalance and enhance the city's semiconductor ecosystem. Notably, the initiative awaits approval from YDME's shareholders and Beijing's State-owned Assets Supervision and Administration Commission.

This year, key players like Huahong Semiconductor and Guangzhou ZenSemi have also made strides in launching their own 12-inch wafer fabs. Furthermore, Semiconductor Manufacturing International Corporation has recorded full capacity utilization of its 12-inch foundry, reinforcing the high demand for advanced chip manufacturing.

As concerns grow over Taiwan Semiconductor Manufacturing Company's ability to maintain certain services amid US tensions, China's domestic players are positioning themselves for increased independence and capability in semiconductor production.