(Yicai Global) Aug. 18 -- Shares of Konka Group surged after the Chinese consumer electronics maker said that it will form a CNY10 billion (USD1.4 billion) equity investment fund with a municipal government in eastern China to tap into opportunities in the semiconductor and other emerging sectors.

Konka's stock price [SHE:000016] rose 9.94 percent to CNY7.96 (USD1.20) this morning.

The electronics manufacturer and the government of Yancheng have inked a framework agreement to set up the fund to invest in artificial intelligence, internet of things, and new materials, the Shenzhen-based firm said in a statement yesterday.

The first phase of the fund should be CNY3 billion. The city in Jiangsu province should contribute nearly 60 percent of the total as a limited partner. Konka should hold a 40 percent stake.

In May 2018, Konka said that it will transform to become a chip company, estimating it to take from five to 10 years to stand among the best international semiconductor makers.

In March, the firm started building a memory chip packaging and testing plant in Yancheng with a total investment of CNY2 billion. The factory should be ready by the end of this year and make products that can be used in smartphones and TVs.

Konka has penned deals with industrial parks in Chongqing in western China and Hefei in eastern China to support chip manufacturing.

Editor: Emmi Laine