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Sanan Optoelectronics Plans to Invest 16 Billion in a Semiconductor Project in Changsha
Release Time:
Jun 24,2020
Securities Times Reporter Wang Jiming
Sanan Optoelectronics (600703) announced on the evening of June 16 that the company plans to invest 16 billion yuan in a semiconductor industrialization project in Changsha. In recent years, Sanan Optoelectronics has been steadily increasing its efforts in the compound semiconductor sector, and the Changsha project marks another initiative focused on compound semiconductors following Sanan Optoelectronics’ previous investment in Quanzhou Sanan.
Sanan Optoelectronics announced that the company has decided to establish a subsidiary within the park under the Management Committee of the Changsha High‑Tech Industrial Development Zone, with plans to invest in the R&D and industrialization of third‑generation semiconductor technologies—including, but not limited to, silicon carbide—covering the entire industry chain from crystal growth to substrate fabrication, epitaxial growth, chip fabrication, and packaging, with a total investment of 16 billion yuan.
It is reported that once all land-use procedures and relevant conditions are in place, the company will complete the construction of Phase I within 24 months and commence production; complete the construction of Phase II and finalize fixed asset investments within 48 months, also commencing production; and reach full production capacity within 72 months.
On June 15, Sanan Optoelectronics signed a “Project Investment and Construction Contract” with the Management Committee of the Changsha High‑Tech Industrial Development Zone. Regarding the specific products to be developed and constructed, Sanan Optoelectronics stated that its primary focus will be on the research, development, production, and sales of 6‑inch SIC conductive substrates, 4‑inch semi‑insulating substrates, SIC diode epitaxial wafers, SiC MOSFET epitaxial wafers, SIC diode epitaxial chips, SiC MOSFET chips, silicon carbide device packaged diodes, and silicon carbide device packaged MOSFETs—though the final scope shall be subject to the feasibility study report for the project implementation entity designated by Party A and approved by Party B.
San’an Optoelectronics is primarily engaged in the R&D, production, and sales of full-color, ultra-high-brightness LED epitaxial wafers and chips, III–V compound semiconductor materials, microwave communication integrated circuits and power devices, as well as optical communication components. The company is committed to developing its compound semiconductor integrated circuit business and strives to become a semiconductor manufacturer with global competitiveness.
Sanan Optoelectronics started out in the LED industry, but it began laying the groundwork in the integrated circuit sector at a very early stage. According to Tianyancha, the company’s wholly owned subsidiary, Sanan Integrated Circuit Co., Ltd., was established on May 26, 2014, with a business scope that includes integrated circuit design; engineering and technological research and development; as well as wholesale of other mechanical equipment and electronic products.
San’an Integrated is the leading contract manufacturer of compound semiconductors in China, with operations spanning microwave RF, high‑power power electronics, and optical communications. The company has obtained qualified supplier certifications from key domestic customers, and comprehensive collaborations have been initiated across all business segments. In 2019, San’an Integrated generated operating revenue of RMB 241 million, representing a year‑on‑year increase of 40.67%; in the first quarter of 2020, revenue reached RMB 166 million. According to statistics from Guosheng Securities, in 2019, San’an Integrated had more than 90 cumulative customers for gallium arsenide shipments; mass production was launched for key customers of gallium nitride products, with capacity ramping up; the number of power electronics customers exceeded 60; optical communications made breakthroughs toward higher‑value‑added products; and filter products are expected to begin generating sales in 2020.
At the end of 2017, Sanan Optoelectronics announced a substantial investment of 33.3 billion yuan to develop the Nan’an Park of “Quanzhou Chip Valley” — the Sanan High‑End Semiconductor Project. The project primarily encompasses the R&D and industrialization of high‑end gallium nitride LED substrates, epitaxy, and chips; the R&D and industrialization of high‑end gallium arsenide LED epitaxy and chips; and the R&D and industrialization of high‑power gallium nitride lasers— all aimed at expanding capacity for high‑end compound semiconductor production.
According to the project’s initial projections, Sanan Optoelectronics stated that all projects would begin production within five years and reach full capacity within seven years. Industry analysts estimate that once the 33.3 billion yuan investment reaches full production, annual revenue will amount to approximately 27 billion yuan—three times Sanan Optoelectronics’ current revenue. The Quanzhou Nan’an project is also referred to as “recreating a new Sanan Optoelectronics.” According to this year’s reports, the Quanzhou Sanan Semiconductor Project began production at the end of last year and remained operational throughout the Spring Festival. While proactively implementing effective epidemic prevention and control measures in the early stages, the project has steadily advanced construction and production, with capacity gradually returning to planned levels.
In addition, Sanan Optoelectronics is also a company in which the National Integrated Circuit Industry Investment Fund Co., Ltd. (Big Fund) holds shares. According to the first-quarter report, the Big Fund holds approximately 461 million shares of the company, accounting for about 11.30% of the company’s total share capital. At the same time, Sanan Optoelectronics has agreed with Huaxin Investment Management Co., Ltd. (the Big Fund’s sole management entity), the China Development Bank, and Fujian Sanan Group Co., Ltd. to establish a strategic partnership among the four parties, providing strong support for the company’s development of its integrated circuit business, with a particular focus on III–V compound semiconductor technologies. However, the Big Fund recently issued a share reduction announcement, planning to sell no more than 2% of the company’s total shares within the next six months.
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