Photovoltaic Silicon Wafer Giant TCL Zhonghuan Acquires Chinese Chip Startup

TCL Zhonghuan, a leading Chinese photovoltaic silicon wafers firm, announced on January 19 that its subsidiary plans to acquire 100% equity of Xinxin Semiconductor by means of new registered capital, accepting it as a wholly-owned subsidiary to rapidly expand its silicon wafer production capacity.

The reorganization comes only six months after TCL Technology, the controlling shareholder of TCL Zhonghuan, took a stake in Xinxin Semiconductor. In July 2022, TCL Technology subscribed for registered capital of Xinxin Semiconductor totaling 1.79 billion yuan ($263,953,402).

Xinxin Semiconductor and TCL Zhonghuan are both Chinese top-line semiconductor silicon wafer manufacturers. Xinxin Semiconductor focuses on the R&D and manufacturing of 12-inch silicon wafers, which were put into production in October 2020, with a planned monthly production capacity of 600,000 wafers. Its products are mainly applied in logic chips and memory chips for mobile communication, portable equipment, automotive electronics, the Internet of Things, industrial electronics and other industries.

By the end of October 2022, Xinxin Semiconductor’s operating income was 161 million yuan, its net loss was 503 million yuan, and its net cash flow from operating activities was -561 million yuan.

TCL Zhonghuan and TCL Technology are increasing their investment in photovoltaic new energy, semiconductors and other fields, and have already achieved initial results. For TCL Technology, the revenue and profit of new energy photovoltaic business has increased significantly, and its contribution to the company’s overall performance continued to improve. According to the latest 2022 annual performance forecast released by TCL Zhonghuan, it is estimated that the net profit attributable to shareholders will be 6.6 billion yuan to 7.1 billion yuan last year, up 63.79%-76.20% year-on-year. However, the net profit growth rate narrowed significantly compared with the previous year. In 2021, its net profit was 4.03 billion yuan, a year-on-year increase of 270.03%.

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Silicon wafers are the main carrier of semiconductor devices. Thanks to their abundant storage capacity, silicon-based semiconductor materials are widely used. However, Chinese manufacturers account for a very low proportion in the field. In 2021, the total sales of Shin-Etsu Chemical, SUMCO, Siltronic, GlobalWafers and SK Siltron, the top five semiconductor silicon wafer enterprises in the world, accounted for 86.6% of the global sales, showing extremely high market concentration.