Zhitong Financial APP News, Hua Hong Semiconductor (01347) issued an announcement that on June 29th, 2022, the company, Huahong Hongli, Wuxi entity, National Integrated Circuit Industry Fund, National Integrated Circuit Industry Fund II and Huahong Wuxi signed a capital injection agreement. The board of directors has conditionally agreed that Huahong Wuxi's registered capital will be increased from US $1.8 billion to about US $2.537 billion. Among them, the company, Huahong Hongli, Wuxi entity and the National Integrated Circuit Industry Fund II each contributed approximately US $1.778 billion, US $230 million, US $160 million and US $232 million respectively as capital injections to Huahong Wuxi. Upon completion of the capital injection, Huahong Wuxi will continue to be a non-wholly owned subsidiary of the company, which is approximately 22.2% owned by the company and approximately 28.8% held by Huahong Hongli.
Huahong Wuxi 12-inch (300mm) wafer plant entered its fourth year of production in 2022, the announcement said. Although Huahong Wuxi continues to expand its production capacity, it is still in short supply due to the continued strong demand for wafers brought about by market development. The capacity utilization of Huahong Wuxi remains at a very high level. In the financial years 2020 and 2021, Huahong Wuxi has achieved all the internal business objectives of technology development, capacity expansion and product delivery.
In addition, it is expected that the global imbalance between supply and demand of semiconductors and chips will continue beyond 2022, especially in the automotive sector, one of the industries the company focuses on. Huahong Wuxi received the IATF16949 Automotive quality Management system Certification in 2020 and introduced its automotive products into its 12-inch wafer plant from 2021. Coupled with the proposed capital injection, Huahong Wuxi's expertise will enable the company to further meet the needs of the automobile market. The company looks forward to seizing and taking advantage of this attractive and significant market opportunity to ensure that Huahong Wuxi has sufficient working capital to expand its 12-inch (300mm) wafer production capacity.
In view of the strong performance of Huahong Wuxi and the company's "8 inch + 12 inch" corporate strategy, the company will continue to expand the production capacity of its 12-inch wafer production line in 2022. The capital injection is in line with the company's strategy to enhance its leading market position and competitiveness in the 8-inch (200mm) and 12-inch (300mm) wafer foundry industries.