Deepening its push for technological self-reliance amid tightening global supply chain pressures, the strategic Chinese manufacturing hub of Wuxi has launched a new 6 billion yuan investment platform to fuel a massive expansion of Huahong's advanced chip foundry operations.
Located in the heart of Jiangsu Province within the economic powerhouse of the Yangtze River Delta, Wuxi serves as a vital anchor in China's national security architecture, fortifying domestic semiconductor production to protect critical industrial infrastructure and supply chains from foreign technological restrictions.
The newly established Wuxi Xinhong Guoxin Phase II Investment Co., Ltd., backed by state-owned entities including Guonix Industrial Investment Group and the Wuxi Industry Development Group, will inject 834 million dollars to secure a 20 percent equity stake in Wuxi Huahong Grace Semiconductor Phase III.
This multi-billion-dollar project will construct a 12-inch specialty process wafer foundry boasting a projected monthly capacity of approximately 55,000 wafers. The initiative builds upon earlier municipal funding rounds, including a 5.8 billion yuan injection by the same state-backed consortium for Huahong's Phase II project launched in 2023.
Scheduled for completion and production by December 2027, the Phase III project carries a total investment tag of 6.95 billion dollars. Funding will be drawn partly from over-raised corporate capital and surplus funds totaling roughly 5.56 billion dollars, directed heavily toward equipment procurement and cleanroom infrastructure. The aggressive expansion is propelled by soaring market demand for specialty semiconductors, highlighted by Huahong reporting a 41.8 percent year-over-year jump in embedded non-volatile memory revenue in the second quarter of 2026, alongside a 149.3 percent surge in standalone non-volatile memory sales as factory capacity utilization hit 102.8 percent.
Wuxi's rise as a cornerstone of China's domestic chip supply chain is further reinforced by a deeply localized ecosystem spanning engineering, chemical reagents, and equipment manufacturing. Local engineering consortiums such as Taiji Industry's subsidiary ECEC secured the general contract for Huahong's Fab 9B project for 3.778 billion yuan. Meanwhile, nearby suppliers like Jiangyin-based Jianghuawa are supplying G5-grade wet electronic chemicals directly to 12-inch production lines, and equipment firms like Bio-Chemical subsidiary Xinhuilian are advancing plant construction to integrate advanced refurbishment and coating operations in Wuxi by the end of 2026.
Supported by industry giants like SK Hynix and CR Micro alongside an extensive network of design, packaging, and equipment firms, Wuxi's integrated circuit sector continues to accelerate. During the first half of 2026, the city's 376 scale-above integrated circuit enterprises generated 130.8 billion yuan in operating revenue, marking a 16.3 percent increase from the previous year and cementing Wuxi's status as an indispensable fortress of China's high-tech manufacturing independence.
