Chinese foundry Hua Hong Semiconductor (Hua Hong Grace) increased its purchases of domestically made chipmaking equipment while upgrading an existing 8-inch wafer fabrication plant. The company is now redirecting funds left over from that project toward a new production line in Wuxi.
The move comes as U.S. restrictions on semiconductor equipment exports to China continue. Hua Hong said greater use of Chinese-made equipment was one reason its upgrade cost less than planned.
According to a filing posted on Sep. 27 through the Shanghai Stock Exchange's STAR Market disclosure system, Hua Hong plans to close its 8-inch fab optimization and upgrade project. It had allocated 2 billion yuan to the project from funds raised through its share offering, but said the amount invested would be about 1.257 billion yuan less than originally planned.
Hua Hong attributed the lower use of proceeds to adjustments based on market demand, payments for some equipment from other funding sources, and a higher share of purchases from Chinese equipment suppliers.
The upgrade involved replacing major manufacturing equipment used for dry etching, thin-film deposition, ion implantation, wet etching and cleaning, chemical mechanical polishing (CMP), and metrology and inspection. Hua Hong said the changes improved the line's process platforms and met the project's original goals.
The project was designed to upgrade parts of the 8-inch line to meet demand for specialty processes, including embedded non-volatile memory (eNVM), and to improve its power semiconductor process platform.
Funds remaining from the fab upgrade and a specialty-process research and development project will now support Wuxi Phase III. Hua Hong plans to put approximately 2.5 billion yuan in remaining proceeds from those projects, together with about 3 billion yuan in unused proceeds raised above its original target, into the expansion—a total of roughly 5.5 billion yuan.
Wuxi Phase III is a $6.95 billion project to build a 12-inch specialty-process line with capacity for 55,000 wafers per month. It will produce chips using logic and radio-frequency (RF) processes, as well as image sensor and non-volatile memory technologies. Hua Hong plans to complete the line and begin operations by the end of 2027.
