Since October, China’s National Integrated Circuit Industry Investment Fund Phase II (hereafter referred to as “Big Fund Phase II”) has made two significant investments.

First, it invested in JCET Group’s subsidiary, JCET Group Automotive Electronics (Shanghai) Co., Ltd. (hereafter referred to as “JCET Automotive Electronics”). Later, it invested in ChangXin Xinqiao Storage Technology Co., Ltd. (hereafter referred to as “ChangXin Xinqiao”).

Data reveals that since its establishment, Big Fund II has invested in nearly 40 companies, with a total investment exceeding ¥55 billion. Despite the semiconductor industry’s low point this year, Big Fund Phase II has remained active, particularly emphasizing “strengthening the supply chain.” This includes increasing investments in critical areas like semiconductor equipment and materials.

1. Investing in ChangXin Xinqiao, Enhancing Storage Manufacturing

On October 26th, Big Fund II invested ¥14.5 billion to acquire a 33.14% stake in ChangXin Xinqiao.

According to industry sources, Changxin Xinqiao is one of the projects developed as part of the ChangXin Memory Technologies (CXMT), a collaboration between Hefei Municipal Government, CXMT, Overseas Chinese Town Holdings Company, and NAURA Technology Group Co. in 2019.

As per previous public announcements, the total investment in the CXMT Semiconductor Manufacturing Base exceeds 220 billion yuan. The project is situated in the Hefei Airport Economic Demonstration Zone and primarily focuses on the Changxin Memory project, involving the development of the entire upstream and downstream industrial chain.

Among these initiatives, the Changxin 12-inch storage memory wafer manufacturing base stands out with a total investment of 150 billion yuan, making it the largest single industrial project investment in Anhui Province.

Additionally, according to information on Changxin Memory’s official website, their core product is DDR4 memory chips, which belong to the fourth generation of double data rate synchronous dynamic random-access memory (SDRAM).

2. Increasing Investment in JCET Group’s Subsidiary: Automotive Electronics Focus

On October 27th, JCET Group’s subsidiary, JCET Group Automotive Electronics, received a total capital injection of 4.4 billion yuan from a combination of new and existing shareholders, further emphasizing its commitment to the development of in-vehicle technology. This infusion of capital will accelerate the construction of its first-phase project for manufacturing and testing automotive chips.

After this capital injection, the subsidiary’s registered capital increased from ¥400 million to ¥4.8 billion, remaining a subsidiary of JCET Group. JCET Group Management’s ownership will be diluted to 55%, while Big Fund Phase II will hold an 18% stake.

JCET Group stated that this capital injection is primarily intended for the construction and operation of the target company, aligning with the company’s strategic plans and business development requirements.It aims to better serve the continuously growing market and customer demands, especially in strengthening the company’s automotive electronics business.

Currently, the company’s financial health is robust, and it believes that this capital infusion will not significantly impact its liquidity.

3. Big Fund Phase II Focuses on “Strengthening and Supplementing the Supply Chain” and Plays a Significant Role in the Down Cycle

The semiconductor industry has experienced significant performance fluctuations due to the ongoing semiconductor down cycle. In response to these challenges, Big Fund Phase II has become more active.

The fund has appeared on the shareholder lists of multiple semiconductor companies striving for initial public offerings (IPOs), including Hua Hong Semiconductor Limited, RYCHIP Semiconductor Inc., Guanggang Gases & Energy Company Limited, and Sinophorus Electronic Materials Co..

Notably, Big Fund Phase II has shown continued interest in Hua Hong Semiconductor Limited.

Hua Hong Semiconductor 

Silan Microelectronics Co.

Silan Microelectronics Co. has also attracted significant attention from Big Fund Phase II. On August 28th, Silan Microelectronics announced its intention to jointly invest 1.2 billion RMB with affiliated company Big Fund Phase II and non-affiliated entity HaiChuang Development Fund to subscribe for newly increased registered capital of 1.19 billion RMB in the affiliated joint-stock company, Xiamen Silan Advanced Compound Semiconductor Co., Ltd.. Silan Microelectronics is set to acquire controlling interest in Xiamen Silan Advanced Compound Semiconductor, while Big Fund Phase II will hold a 14.11% stake.

Publicly available information indicates that Xiamen Silan Advanced Compound Semiconductor revolves around the manufacture of compound semiconductor chips. In July of the previous year, the company initiated the “SiC Power Device Production Line Construction Project.”

This project entails an investment plan of 1.5 billion RMB to construct a 6-inch SiC power device chip production line. Ultimately, it aims to achieve an annual production capacity of 144,000 pieces of 6-inch SiC power device chips, comprising 120,000 pieces/year of SiC-MOSFET chips and 24,000 pieces/year of SiC-SBD chips.

China Resources Microelectronics Limited

On August 15, it was announced that the company’s subsidiary, Runpeng Semiconductor, plans to increase capital and introduce external investors, including Big Fund Phase II. Following the completion of this transaction, Runpeng Semiconductor’s registered capital will increase from 2.4 billion RMB to 15 billion RMB.

The announcement indicates that the external investors that Runpeng Semiconductor intends to introduce include 12 institutions, including Big Fund Phase II. Big Fund Phase II is committed to subscribing to a registered capital of 3.75 billion RMB.

In addition, the upstream semiconductor materials sector has also attracted the attention of Big Fund Phase II. In late March of this year, Jingrui announced that its subsidiary, Hubei Jingrui, plans to introduce strategic investors through capital expansion. Big Fund Phase II, among others, is set to inject 160 million yuan in cash into Hubei Jingrui.

Summary

Overall, Big Fund Phase II’s investments span the entire integrated circuit industry chain. However, it’s worth noting that compared to Big Fund Phase I, Big Fund Phase II places more emphasis on strengthening and supplementing the supply chain.

It has increased investments in critical areas such as upstream semiconductor equipment, materials, and shows optimism towards emerging hot sectors like AI and automotive electronics.

(Photo credit: Pixabay)

As AI demand continues to surge, TSMC (Taiwan Semiconductor Manufacturing Company) has initiated an extensive expansion plan for its CoWoS (Chip-on-Wafer-on-Substrate) production. Within the industry, reports suggest that TSMC, a leading semiconductor foundry, placed a significant wave of orders with Taiwanese equipment manufacturers last week, creating a notable impact.

Additionally, outsourced semiconductor assembly and testing (OSAT) giants, which were originally inquiring about orders, have also significantly increased their orders for advanced packaging. This wave of orders is estimated to be fulfilled between March and April of the upcoming year.

The growth in demand for advanced semiconductor processes due to AI applications necessitates advanced packaging technologies to keep pace. With packaging technologies advancing from 2D and 2.5D to the more advanced 3D IC (Integrated Circuit) configurations, the number of IC stacking layers is increasing, leading to a greater demand for advanced packaging equipment. Considering the current emphasis on CoWoS technology, the industry estimates that production capacity will reach 12,000 to 14,000 wafers in 2023 and double to over 30,000 wafers in 2024.

According to a report by Taiwan’s Money DJ, information from equipment industry sources reveals that TSMC recommenced orders for CoWoS equipment in April 2023, with a second wave of orders in June. Subsequently, sporadic additional orders were placed, and last week witnessed a new significant wave of orders, surprising many.

An anonymous executive from a Taiwanese equipment company expressed that they initially believed TSMC’s orders for CoWoS equipment had concluded, making the recent wave of orders even more unexpected. Furthermore, the increase in orders for advanced packaging equipment by semiconductor testing and packaging facilities is also seen as encouraging.

Market experts believe that semiconductor testing and packaging facilities and semiconductor foundries have different positions and advantages in the advanced packaging market. Their cooperative relationships outweigh their competition. Major OSAT players like ASE, Amkor, and JCET have long possessed advanced packaging technology and are positioned to become an alternative choice for major foundries due to their technical upgrades and competitive pricing. In other words, top-tier orders from customers will be firmly in TSMC’s grasp, while other opportunities will likely be pursued by SATS companies.

Regarding the supply of CoWoS equipment, suppliers like Scientech have received over 30 orders for wet etching processing equipment, while Grand Process Technology and others have shipped nearly 20 units. Meanwhile, G2C+ Alliance members such as GMM and C Sun have reportedly received over 40 orders from the TSMC’s Longtan factory.

(Photo credit: TSMC)