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Zhonghuan to build new 8- and 12-inch wafer fab facility
Posted on Tuesday, 08 January 2019 08:52
Tianjin Zhonghuan Semiconductor is diluting its equity through an A-share issue worth up to CNY 5.00 billion (USD 727.88 million) to fund the construction of a new 8- to 12-inch wafer production facility.

Last year, the global semiconductor raw material sector was worth about USD 27.13 billion, of which the highlight concentrated substrate category was the largest with a value of USD 8.71 billion, or 32.1 per cent of the overall market.

Currently, five top suppliers, that include but are not limited to Shin-Etsu Chemical, Siltronic and SK Siltron, hog 90.0 per cent of this segment.

Furthermore, on mainland China, only a few companies have an 8-inch wafer production capacity and 12-inch semiconductors are mainly imported.

The industry-wide expansion is being driven by an increase in demand for silicon wafers, especially integrated circuits, due to the rising popularity of smart devices, as well as the development of artificial intelligence and blockchain technology.

Zhonghuan is trying to gain an edge in the burgeoning semiconductor market, for which global sales have grown by an annual compound rate of 7.2 per cent between 20012 and 2017, according to the statement.

At the moment, the manufacturer’s products are focused on the new energy segment and the microchip industry accounts for a relatively low level of sales.

The fundraiser will bankroll the construction of the new production line, which ought to help Zhonghuan step into the capacity gap to win market opportunities.

In addition, the equity dilution ought to reduce the group’s asset-liability ratio, which stood at 59.3 per cent at the end of September 2018.

Zhonghuan’s cash call is one of the largest capital increased announced in the trailing 12 months that targets a global semiconductor and other electronic component manufacturer, according to Zephyr, the M&A database published by Bureau van Dijk.

Zephyr shows the deal is joint second by value; in October 2018, Golden Concorde’s Chinese solar energy arm said it would raise up to CNY 5.00 billion to push into the semiconductor industry to create a second core revenue stream.

© Zephus Ltd