(Yicai Global) April 8 -- Zhonghuan Semiconductor’s shares rose after the world’s second-largest maker of silicon wafers announced a plan to jointly invest CNY20.6 billion (USD3.2 billion) with its controlling shareholder TCL Technology Group to start producing silicon materials, after polysilicon prices surged.

Zhonghuan [SHE: 002129] finished 3.8 percent higher today at CNY41.91 (USD6.59), after earlier gaining as much as 4.6 percent. TCL [SHE: 000100] rose 1.5 percent to CNY4.88 (77 US cents).

The plan includes a high-purity polycrystalline silicon plant with annual output of 120,000 tons, a semiconductor monocrystalline silicon material production base with related supporting facilities, and a silicon materials development center, Zhonghuan said in a statement late yesterday.

The Tianjin-based firm and leading panel maker TCL inked deals with the governments of the Inner Mongolia Autonomous Region and its capital city of Hohhot, where the projects will be located, on the same day.

The surging cost of high-purity polycrystalline silicon, the main ingredient in monocrystalline silicon -- which is mostly used in solar wafers and other semiconductor components -- has been a big challenge for Zhonghuan and other downstream users. Prices surged over 160 percent last year because of the strong demand.

Zhonghuan did not disclose the investment ratio between it and TCL, the main application of the monocrystalline silicon material project, or the construction schedule.

The Inner Mongolia government will continue to support Zhonghuan to build new photovoltaic power plants, the firm said, adding that its existing production base in the region is expected to become the PV new energy material base with the best economies of scale in the world.

Zhonghuan’s annual capacity of solar silicon wafers was 84 gigawatts as of the end of 2021, an executive at the company told investors earlier this year, adding that it was building other solar silicon wafers projects with a capacity of 50 GW per year in China’s Ningxia Hui Autonomous Region

TCL became Zhonghuan’s controlling shareholder in 2020 when it bought the entire stake of former controller Tianjin Zhonghuan Electronic for CNY11 billion.

Editor: Futura Costaglione