China invests $1 billion in HLMC – another domestic chip maker
December 7, 2023

China invests $1 billion in HLMC – another domestic chip maker

To develop its chip industry and enable even more advanced 10nm manufacturing processes, China is investing $1 billion in Shanghai semiconductor maker HLMC (Huali Microelectronics Corp.). The investment in this company comes from the Chinese investment fund, also known as “Big Fund 2”, which is supposed to improve the production capabilities of the Chinese semiconductor industry.

In this way, HLMC has the potential to become the second Chinese chip manufacturer capable of manufacturing processes based on the sub-10 nm class, writes DigiTimes.

Unlike Semiconductor Manufacturing International Corp. (SMIC), which has historically been positioned as China's leading chipmaker with the goal of competing against Taiwan's TSMC, HLMC has nevertheless maintained a lower profile in the industry. Officially, this company can produce chips on 22 nm and 28 nm production processes.

However, HLMC also started making chips on the 14 nm FinFET process using deep ultraviolet (DUV) lithography machines in 2020. Many DUV lithography machines can be used to make chips on more advanced manufacturing technology, below 10 nm.

Considering that Chinese companies cannot obtain the most modern chip manufacturing tools due to US sanctions against China in this sector, this has affected HLMC's development strategy. The company is now working to improve its manufacturing processes using advanced methods such as “Multi-patterning” technology on DUV machines, and some believe that HLMC could indeed produce chips more advanced than 10 nm. As a result, Chinese authorities remain optimistic about the development of their own semiconductor industry.

To help China achieve its goals, companies such as HLMC are receiving significant cash from Big Fund 2. The company is apparently well-listed, and the fund's support has helped it increase its registered capital from 22 billion yuan ($3.078 billion). to 28.4 billion yuan ($3.974 billion). The main shareholders of the company are the Huahong Group with 54 percent of the shares and other companies and funds linked to the Chinese authorities which together have 36 percent of the shares. The new cash flow shows the government's interest in making HLMC a major chip maker like SMIC.

One of the consequences of the current US sanctions against the Chinese semiconductor sector is that Chinese companies usually do not share information about their progress in new process technologies. As a result, other countries and their companies do not know what the capabilities of Chinese chipmakers really are.

HLMC has not been open about its progress, particularly when it comes to FinFET technology. The fact that their shares are not available to retailers, which would make them public property, enables this manufacturer and its majority owner.