(Yicai Global) Dec. 19 -- Hangzhou Silan Microelectronics Co. [SHA:600460] will invest in a 12-inch integrated circuit production line project with total investment of CNY17 billion (USD2.6 billion), upon completion of which the company's stake in the project company will rise to 85 percent from its current 15 percent, with this outlay set to boost its advanced manufacturing of integrated circuits.
The company will also jointly invest CNY5 billion (USD756 million) together with Xiamen Semiconductor Investment Group Co. to build a 4/6-inch compatible advanced compound semiconductor device production line in Haicang district in Xiamen a city in China's southeastern Fujian province.
Main products include the next generation of optical communication module chips, 5G and radio frequency related modules and high-end LED chips.
The company has signed a framework agreement on strategic cooperation with the government of Haicang district to build the two projects, and an investment cooperative agreement with Xiamen Semiconductor Investment, which the district controls, on the 12-inch integrated circuit production line project, the firm announced yesterday.
The project company for the 12-inch integrated circuit production lines has a registered capital of CNY2 billion, to which Silan contributed CNY300 million. Within seven years after commencement of the production lines, Silan may require Xiamen Semiconductor Investment to transfer partial equity in the project company, giving the former a shareholding ratio of at least 51 percent, per the announcement.
Xiamen Semiconductor Investment may need to assign further shares within three years after the equity transfer, and consequently its shareholding will eventually drop to 15 to 35 percent, the announcement added.
The two parties plan to build two 12-inch integrated circuit production lines in the district, with microelectromechanical systems (MEMS) and power devices as their main products.
The two production lines involve a total investment of CNY17 billion, of which CNY7 billion will be for the first that has a designed capacity of 80,000 pieces per month, which will be built in two phases, the announcement said.
The first phase will achieve a monthly capacity of 40,000 pieces with an investment of CNY5 billion, where the capital is sourced from the registered capital of the project company and bank loans. The second phase will involve an investment of CNY2 billion, to be financed from bank loans guaranteed by both parties that aims to raise the monthly capacity by 40,000 units, the announcement said.
The third phase of the project, namely the second 120-inch production line, is preliminarily estimated to require a total investment of CNY10 billion, while the concrete investment and capacity plans will be decided later, the announcement stated.
However, the announcement did not reveal more details about the 4/6-inch compatible advanced compound semiconductor device production line.
Shareholders of Xiamen Semiconductor Investment, a partner of this investment project, include Xiamen Haicang Investment Group Co. which is a wholly state-owned company invested in and established by the district government that holds 80 percent stake in the former, with the remaining 20 percent held by Haicang Tourism Group, the announcement further noted.