China's Hua Hong foundry invests $2 billion in Wuxi specialty wafer plant
The expansion is part of a larger $4.2 billion project to boost domestic 12-inch specialty wafer capacity by 30%, bypassing US restrictions to meet surging AI demand.
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- Hua Hong Grace Semiconductor is investing $2 billion to construct a new 12-inch specialty wafer production line in Wuxi, China, according to the South China Morning Post.
- The project is a joint venture with state-backed entities, including China's National 'Big Fund', and will add 55,000 wafers per month to the company's manufacturing capacity.
- The expansion represents a 30% increase in Wuxi output, specifically aimed at supplying China's domestic AI infrastructure and securing local supply chains.
China’s second-largest semiconductor foundry, Hua Hong Grace Semiconductor, is investing $2 billion as part of a larger $4.2 billion project to construct a new specialty wafer fabrication plant in the chip hub of Wuxi, the South China Morning Post reported on September 2. The expansion is designed to meet skyrocketing domestic demand for artificial intelligence infrastructure while bypassing tightening United States technology export restrictions.
The project is structured as a joint venture with state-backed investment vehicles, including China's National Integrated Circuit Industry Investment Fund, commonly known as the 'Big Fund'. Hua Hong and its subsidiaries will retain a controlling 51% stake in the venture, which will build the company's third semiconductor facility in Wuxi.
The new facility will establish a 12-inch specialty wafer production line, adding 55,000 wafers per month to Hua Hong's capacity. This represents an estimated 30% increase in the company's total production capacity in Wuxi. The specialty wafer line will supply local developers and server makers with the silicon needed to construct domestic AI chip clusters and networking hardware, reducing reliance on foreign foundries like TSMC.
As the US continues to restrict China's access to cutting-edge nodes, Chinese chipmakers are shifting their strategy to secure massive volumes of mature and specialty silicon. Hua Hong's $2 billion expansion shows that China is aggressively scaling its domestic supply chain for the essential power management, sensor, and networking chips that bind AI clusters together — a reminder that the AI infrastructure race is won through the mass of the entire semiconductor ecosystem, not just GPU nodes alone.