China’s CanSemi Technology has raked in 4.5 billion yuan (about $672 million) in a new funding round to invest in the construction of new facilities and expand its production of industrial and automobile chips.

CanSemi, which focuses on the mass production of 12-inch silicon wafers, secured the fresh capital from investors including Guangzhou Yuexiu Industrial Investment Fund Management, the private equity (PE) unit of Chinese publicly-listed firm Yuexiu Financial Holdings.

Other strategic investors in the deal include Chinese state-owned automaker Guangzhou Automobile Group’s investment arm GAC Capital and Guangdong Finance Fund Management, a government-guided fund that manages over 41 billion yuan ($6.1 billion).

CanSemi was founded at the end of 2017 as the first local manufacturer capable of mass-producing 12-inch silicon wafers in southern China’s Guangzhou City, as well as the overall Greater Bay Area — an integrated economic hub consisting of Hong Kong, Macau and other nine southern Chinese cities. It specialises in the production of analogue integrated circuits (ICs), which work as a basic component in most electronic devices to enable functions such as power management and operational amplification for almost every consumer electronics ranging from computers and smartphones to wearables and vehicles.

The firm started by developing analogue ICs for consumer electronics, before it expanded to offer industrial-grade and automotive-grade products with a focus on the integration of semiconduction with technologies like the Internet of Things (IoT) and 5G.

CanSemi Technology’s 12-inch silicon wafer fab in Huangpu District, Guangzhou City, Guangdong Province, China. Source: CanSemi

CanSemi is one of the latest venture-backed domestic semiconductor companies in China looking to break into the IC market that has been dominated by foreign players for years.

Despite being the world’s largest IC consumer since 2005, China only counts for a fraction of the global IC production. Of the $31.2 billion worth of ICs manufactured in China in 2021, China-based companies produced $12.3 billion, accounting for only 6.6% of the country’s $186.5-billion IC market, according to semiconductor market researcher IC Insights.

The new funding is expected to help CanSemi move forward with its plans of investing a total of 37 billion yuan ($5.5 billion) in building new production facilities.

It already completed the construction of Phase I and Phase II of the new facilities. Upon the completion of all three phases, it estimates to deliver nearly 80,000 units of 12-inch analogue ICs every month, primarily to clients in the Greater Bay Area.

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