Hua Hong Semiconductor, China's second-largest contract chipmaker, is investing $2 billion to build a new fabrication plant in Wuxi, China as part of a push to expand capacity as domestic demand for AI-related chips outstrips what the industry can currently produce.
The company disclosed the investment in a filing to the Hong Kong stock exchange this week, confirming plans for a new 12-inch specialty production line which is its third facility in Wuxi, a major chip-manufacturing hub in eastern China. Once fully operational, the expansion is expected to add 55,000 wafers a month to the site's capacity, a roughly 30 per cent increase.
Hua Hong and its Shanghai subsidiary will together supply $2.1 billion of the funding, giving them a controlling 51 per cent stake in the project while entities that are linked to the state will contribute the rest. Total funding for the buildout comes to $4.2 billion once the state capital is factored in, which shows how closely Beijing's industrial-policy apparatus remains tied to the country's chipmaking ambitions.
The expansion comes as Hua Hong, along with rival SMIC, is running its existing fabs close to or above full capacity. Hua Hong's utilisation rate hit 102.8 per cent in the second quarter, and executives have said orders for certain product lines are running at 1.5 to 2 times available capacity, with some categories booked out through 2027. That squeeze has already pushed foundry prices higher through the first half of the year, with further increases expected into 2027.
The chips are what’s driving the surge, surprisingly; not the cutting;edge AI accelerators themselves - microcontrollers, power-management components, memory and analog chips that support AI servers and data-center infrastructure. As global demand for that category has spiked, Chinese customers have increasingly turned to domestic foundries rather than compete for capacity at Taiwanese or other overseas fabs, a shift that's been building since late 2025.
Chinese foundries like Hua Hong and SMIC sit largely in "mature node" territory - chip processes that don't require the most advanced lithography tools the U.S. has restricted export of.
By building out capacity at these nodes rather than chasing the leading edge, Chinese chipmakers can meet a huge and growing share of domestic AI-infrastructure demand without running into the export controls that have throttled access to advanced equipment needed for cutting-edge logic chips.
It's a workaround rather than a breakthrough, but it's a workaround that's proving commercially very effective and one Beijing has clearly decided is worth subsidising.
Whether that capacity keeps up with demand is now the open question. Hua Hong's own executives have described a "secular growth story" running through 2027, with some uncertainty creeping in around 2028, and the timing roughly tracks how long the current wave of AI infrastructure building is expected to last in China and elsewhere.
The Iranian Health Ministry said at least 18 people were killed and 142 others injured in U.S. airstrikes carried out between 30 August 30 and 2 Se...
Russian President Vladimir Putin has said that he thinks there is a chance of a peace being reached with Ukraine. He told ...
Hua Hong Semiconductor, China's second-largest contract chipmaker, is investing $2 billion to build a new fabrication plant in Wuxi, China as p...
The U.S. has launched a fresh wave of strikes on Iran, targeting Islamic Revolutionary Guard Corps (IRGC) sites as Tehran retaliated against U.S. positions across the region, while Iranian officials said at least five people were killed and dozens wounded at a wedding near Sirik.
Russian President Vladimir Putin has said that he thinks there is a chance of a peace being reached with Ukraine. He told the Eastern Economic Forum in Vladivostok, Russia that he believed there was "a chance of finding a solution," to the conflict.
The European Union's foreign policy chief Kaia Kallas says the bloc will tighten enforcement of sanctions against Russia over its war in Ukraine. EU foreign ministers were meeting in Ireland following renewed Russian strikes on cities across Ukraine.
The Iranian Health Ministry said at least 18 people were killed and 142 others injured in U.S. airstrikes carried out between 30 August 30 and 2 September.
From mounting concerns over record global debt levels to growing tensions over China's trade surplus and Russia's return to the negotiating table, this year's G20 finance meeting in Asheville, North Carolina, highlighted the challenges confronting the global economy.
Apple is entering a new era as Tim Cook steps down as chief executive after 15 years at the helm, handing the technology giant's leadership to longtime executive John Ternus.
A humanoid robot developed by Chinese smartphone maker Honor has run 100 metres in 9.32 seconds, beating Usain Bolt's men's world record of 9.58 seconds, China's state broadcaster reported on Saturday.
An artificial intelligence agent running an experimental store in San Francisco has recommended dismissing a human employee after the worker repeatedly arrived late for shifts.
Nvidia is teaming up with some of the biggest names in global finance in a move that underscores how artificial intelligence is rapidly becoming one of the world's most sought-after investment themes.
Parts of Europe and the Arctic will briefly fall into darkness on Wednesday, 12 August, as the Moon passes between Earth and the Sun in a total solar eclipse.
You can download the AnewZ application from Play Store and the App Store.
What is your opinion on this topic?
Leave the first comment