(Yicai) June 12 -- Shares of National Silicon Industry Group, one of China’s leading silicon wafer suppliers, gained after the company said it will spend CNY13.2 billion (USD1.8 billion) to expand production amid signs of a pickup in demand in the semiconductor industry.

NSIG [SHA: 688126] ended 3.1 percent up at CNY15.09 (USD2.08) a share on Shanghai's Nasdaq-style Star Market, after earlier climbing by as much as 7 percent.

To double its ability to turn out 300-millimeter silicon wafers to 1.2 million units per month, the Shanghai-based firm will invest CNY9.1 billion (USD1.3 billion) upgrading a plant in Taiyuan and CNY4.1 billion revamping a factory in its home city, it announced yesterday.

The Taiyuan project will be jointly funded by NSIG and two state-owned institutional investors, namely the second phase of China Integrated Circuit Industry Investment Fund and Fenshui Capital Management, NSIG said in a separate statement released yesterday.

The trio will set up a joint venture with CNY5.5 billion in registered capital, with NSIG owning 51 percent, the IC investment fund 27 percent, and Fenshui Capital 22 percent.

The global chip industry has slumped since last year as a result of overcapacity, which has weighed on NSIG’s earnings. Net profit tumbled 43 percent to CNY187 million (USD25.8 million) in 2023, while revenue fell 11 percent to CNY3.2 billion. In the first quarter of this year, the firm had a net loss of CNY198 million after revenue shrank 10 percent to CNY725 million.

But the worst may be over. One of NSIG’s major clients, Semiconductor Manufacturing International, saw revenue jump 20 percent to USD1.8 billion in the three months ended March 31, which was also a 4 percent gain on the prior quarter. Global customers are starting to stock up again, so revenue could climb 5 percent to 7 percent this quarter from last quarter, the chipmaker has predicted.

Editor: Emmi Laine