(Yicai) July 20 -- TCL Zhonghuan Renewable Energy Technology said the leading Chinese supplier of monocrystalline silicon wafers for solar cells will spend CNY12 billion (USD1.8 billion) to build a new factory in Shenzhen to produce high-end silicon wafers for the semiconductor industry.

The plant, located in Shenzhen’s Guangming district, will produce 12-inch polished wafers, epitaxial wafers, and testing wafers for integrated circuits, with a total monthly production capacity of 700,000 wafers, the Tianjin-based firm announced on July 17.

TCL Zhonghuan expects it will take 18 months from the start of construction to the launch of trial production of the project’s first phase, while the total construction period will likely take 60 months.

The project, which aims to increase the company’s production proportion of silicon wafers for logic and memory chips, will be built and operated by TCL Zhonghuan’s controlled subsidiary Zhonghuan Advanced Semiconductor Materials.

Forty percent of the CNY12 billion will come from Zhonghuan Advanced’s own funds, while the remaining 60 percent will be secured through equity financing and syndicated loans.

TCL Zhonghuan has been producing 12-inch semiconductor wafers for about six years. Its first mass production line for 12-inch semiconductor wafers, located in Yixing, Jiangsu province, was put into operation in 2020. By the end of 2024, the production line’s capacity had reached a monthly output of 700,000 wafers.

TCL Zhonghuan also has a 12-inch semiconductor wafer pilot production line in Tianjin, with a monthly capacity of 20,000 wafers, primarily used for research, development, and customer sample delivery.

There are not many companies in China that possess the capability to mass-produce 12-inch semiconductor wafers, and TCL Zhonghuan is among the top domestic suppliers. The Shenzhen project is expected to further enhance the effective supply of high-end semiconductor wafers in the Chinese market to address the capacity gap.

TCL Zhonghuan’s main solar wafer business has experienced poor performance in recent years because the oversupply in the photovoltaic industry chain has led to depressed product prices. In its semiannual earnings forecast, the company estimated a net loss of between CNY3 billion and CNY3.3 billion, compared with a net loss of CNY4.2 billion a year earlier.

Revenue from the semiconductor wafer business likely exceeded CNY3 billion in the period, with a 17 percent year-on-year increase in product shipments, TCL Zhonghuan predicted. However, the business is still operating at a loss.

Shares TCL Zhonghuan [SHE: 002129] closed 4.1 percent down at CNY8.75 (USD1.29) today. The Shenzhen Component Index fell 0.7 percent.

Editor: Futura Costaglione