- State-owned Guosheng Group becomes the group’s largest shareholder, raising its indirect stake in listed chipmaker Huahong Grace to 10.22%
- The capital injection comes as the foundry group expands 12-inch wafer production for power devices, automotive chips and industrial applications
Shanghai state-owned investor Guosheng Group (国盛集团) has agreed to inject 19.1 billion yuan ($2.8 billion) into Huahong Group (华虹集团), increasing its indirect stake in listed chipmaker Huahong Grace (华虹宏力) to 10.22% as Shanghai channels state capital into domestic semiconductor manufacturing.
Huahong Grace, China’s second-largest foundry by market share, said in an exchange filing on October 8 that Guosheng would subscribe for 6.13 billion yuan of newly registered capital in Huahong Group for 19.099 billion yuan in cash.
The Shanghai State-owned Assets Supervision and Administration Commission (SASAC), the state assets watchdog, will also subscribe for an additional 19.7 million yuan.
Following the capital increase, Guosheng’s direct stake in Huahong Group will rise from 15.29% to 41.66%, making it the group’s largest shareholder and overtaking Shanghai SASAC, whose stake will fall from 51.74% to 35.67%.
As Huahong Group indirectly controls Huahong Grace, Guosheng’s indirect stake in the listed company, held through Huahong Group and Huahong International, will increase from 3.75% to 10.22%.
Capital for wafer expansion
Listed on Hong Kong Stock Exchange and Shanghai Stock Exchange, Huahong Grace is one of the nation’s largest foundries specializing in mature and specialty processes, including power semiconductors, analog chips and embedded non-volatile memory.
These technologies serve markets such as automotive electronics, industrial equipment and power management.
The capital injection comes as the group expands its 12-inch wafer manufacturing capacity. Its third-phase project in Wuxi is planned to reach monthly capacity of 55,000 wafers, with a focus on automotive-grade and high-end industrial chips.
The funding strengthens the group’s capital base as chipmakers face growing demand for power devices and other specialty semiconductors.
Unlike cutting-edge foundries focused on the most advanced logic chips, specialty foundries compete through process expertise and production platforms tailored to specific applications.
A new role for Guosheng
Guosheng is a state-owned capital operations platform wholly owned by Shanghai SASAC. Its remit includes investment, capital operations and asset management, with a focus on non-financial sectors.
Its increased stake gives Guosheng a more central role in Huahong Group’s ownership structure, shifting the arrangement from one dominated by direct SASAC ownership toward greater coordination among state-owned shareholders.
For Shanghai, the deal puts a specialized state-capital platform at the center of efforts to support a strategic semiconductor manufacturer while retaining state control.
The immediate priority is to strengthen Huahong’s capacity to expand production in specialty-process markets, where domestic chipmakers are seeking to meet demand from automotive, industrial and power-management applications.
Header image credit: Huahong Grace official website
