[News] China Foundry Push Accelerates with Nexchip RMB 35.5B Phase IV, Hua Hong’s RMB 8.2B Deal

Recent developments in China’s semiconductor sector signal an accelerated pace of expansion, particularly in the wafer foundry segment.

Nexchip Kick-Started Construction of Phase IV Project with Investment of CNY 35.5Bn

On January 4, 2026, Nexchip Semiconductor announced via its official WeChat account that construction has formally begun on its Phase IV project, which carries a total investment of CNY 35.5 billion. The new facility will be located in the Xinzhan area of Hefei, Anhui Province, leveraging the clustering effect of the existing manufacturing campus.

According to the company, the Phase IV project will include a 12-inch wafer foundry production line with a designed capacity of 55,000 wafers per month. The line will support 40nm and 28nm process technologies, covering CIS, OLED, and logic processes. Its products will be widely used in OLED display panels, AI smartphones, AI PCs, intelligent vehicles, and broader artificial intelligence applications. In particular, Nexchip noted that it has already worked closely with customers to complete the development of multiple 28nm logic process platforms. Going forward, the company expects to accelerate domestic substitution and better meet demand from China’s local market.

Nexchip plans to install equipment and tools in the fourth quarter of 2026, achieve initial production thereafter, and reach full capacity by the second quarter of 2028.

HuaHong Announces CNY 8.27bn Acquisition to Further Boost Foundry Capacity

In late December 2025, HuaHong announced that it plans to issue a total of 191 million shares at a price of CNY 43.34 per share to four counterparties—including HuaHong Group, the Shanghai Integrated Circuit Industry Investment Fund, the Phase II Big Fund, and the SDIC Pioneer Fund—to acquire an aggregate 97.4988% equity stake in HLMC (Hua Li Microelectronics). The transaction price is CNY 8.268 billion, excluding any proceeds from accompanying fundraising.

Meanwhile, HuaHong plans to issue additional shares to no more than 35 specific investors (with a six-month lock-up period), raising up to CNY 7.556 billion. The proceeds will be used for HLMC’s technology upgrade and renovation projects, R&D and industrialization of specialty processes, replenishment of working capital, debt repayment, and payment of intermediary fees.

Prior to the transaction, HuaHong held a 2.5% stake in HLMC, and upon completion, HLMC will become a wholly owned subsidiary of HuaHong.

HLMC focuses on IC wafer foundry services, possessing platforms spanning standalone non-volatile memory, embedded non-volatile memory, logic and RF, and high-voltage technologies. Its offerings cover 65/55nm and 40nm nodes and are widely applied in communications and consumer electronics markets.

Following the completion of the restructuring, HLMC’s 65/55nm and 40nm logic and specialty process technologies will be directly injected into the listed company. This will add approximately 38,000 wafers per month of 65/55nm and 40nm capacity, further strengthening HuaHong’s market position.

SMIC Swaps Equity in SMIC North, Big Fund’s H-Share Stake Rises Sharply

On January 2, 2026, disclosures filed with the Hong Kong Stock Exchange showed that SMIC issued 357 million new shares to the National Integrated Circuit Industry Investment Fund as part of the consideration for acquiring a 49% equity stake in SMIC North. Once completed, the Big Fund’s H-share holdings in SMIC increased from 383 million shares to 740 million shares, with its ownership ratio rising from 4.79% to 9.25%.

This transaction represents a key part of SMIC’s broader asset restructuring plan. On December 29, 2025, SMIC announced that it intends to issue a total of 547 million shares to five shareholders of SMIC North, including the Big Fund, to acquire the remaining 49% equity interest. Upon completion, SMIC North will become a wholly owned subsidiary of SMIC.

Founded in 2013, SMIC North focuses on 12-inch wafer foundry manufacturing, providing a range of process platforms including logic, RF, high-voltage, and embedded non-volatile memory. The company operates an advanced 12-inch wafer fab in Beijing’s Yizhuang area and serves as SMIC’s key production base in northern China.

(Photo credit: SMIC)