(Yicai Global) Aug. 25 -- Shengjian Environment Technology, an industrial waste gas treatment solution provider for semiconductor manufacturers, surged by the daily trading limit after saying it will spend CNY300 million (USD43.8 million) to build a plant that will produce chemicals for the semiconductor industry.

Shengjian Environment [SHA: 603324] rose 10 percent today to close at CNY42.90 (USD6.27) a share.

The Shanghai-based firm has penned an investment deal with the Hefei government to build a plant in the city that will develop and produce chemicals, Shengjian Environment said late yesterday. It gave no further details about the plant.

Shengjian Environment said two subsidiaries inked a deal with Nagase ChemteX on Aug. 23, so it can use the Japanese firm’s technology at the Hefei plant to make chemicals for flat panel display makers, including the liquid crystal, light-emitting diode, and organic light-emitting diode kinds.

Shengjian Environment will pay Nagase ChemteX licensing fees of as much as CNY80 million (USD11.7 million) in total based on annual product sales and a percentage agreed by the pair, it added.

Wet chemicals production has a high entry threshold, but its products have high added value, Shengjian Environment said, adding that in China the sector is not fully developed so has good prospects. Wet chemical suppliers will likely ally with downstream firms, and rivals who enter the sector later will face a higher threshold, it said.

Shengjian Environment’s first-half revenue jumped 24 percent to CNY551 million from a year earlier, thanks to robust demand from a fast-growing chip industry, the company said in an earnings report released yesterday. Net profit climbed 21 percent to CNY62.6 million.

Editor: Tom Litting