European chip giant to build SiC plant in China with nearly 23 billion investment

Joint venture to build a new 200mm silicon carbide device manufacturing facility to start up in Q4 2025 Sanan Optoelectronics to build and operate a new 200mm silicon carbide substrate manufacturing facility separately to meet the joint venture's requirements

Europe's second largest chipmaker STMicroelectronics has joined a multi-billion dollar joint venture in China, the Hong Kong-based South China Morning Post reported on its website on June 12. STMicroelectronics will invest US$3.2 billion (about 22.924 billion yuan at the June 13 exchange rate) with China's Sanan Optoelectronics to build a chip factory in Chongqing, a megacity in southwest China.

The investment project focuses on

The joint venture will construct a new 200mm silicon carbide device manufacturing facility to be commissioned in the fourth quarter of 2025

Sanan Optoelectronics will separately build and operate a new 200mm silicon carbide substrate manufacturing facility to meet the requirements of the joint venture

STMicroelectronics is the second largest semiconductor company in Europe, with a market capitalisation of US$42.762 billion (approximately RMB 306.334 billion) as of June 13. ST's current main products are silicon carbide (SiC) power devices, which are used in various applications such as electric vehicles, energy storage and industrial motors. This time, STMicroelectronics came to Chongqing to build a plant is hoping to achieve large-scale mass production of silicon carbide.

Three Ann photoelectric is the most complete domestic layout of the silicon carbide industry chain, the cooperation between the two sides to the water. Three Ann photoelectric announcement shows that the joint venture, three Ann shareholding 51%, STMicroelectronics is 49%. The joint venture will use STMicroelectronics' technology for its exclusive OEM production, and is expected to complete the construction phase and start production in 2025, and to produce 10,000 8-inch silicon carbide wafers per week in 2028.

In a statement released Wednesday, Jean-Marc Chery, president and CEO of STMicroelectronics, said: "China is rapidly electrifying its cars and industry, and ST has established many programs to engage with customers in this market . Creating dedicated plants with key local partners is the most effective way to meet the growing needs of Chinese customers."

The new joint venture will even dwarf US electric car mogul Elon Musk's $2 billion super factory in Shanghai in 2019, the report said.

The project is designed to support China's growing domestic demand for silicon carbide (SiC) devices used in electric cars and other industrial power and energy sectors. It is also highly symbolic in the context of the US chip war against China and the pressure on European governments and companies to take sides.

China's world-leading electric vehicle industry, as well as other industries, is growing rapidly. According to the China Association of Automobile Manufacturers, sales of new energy vehicles in China almost doubled last year to 6.9 million units.

Under the latest agreement, which is still subject to regulatory approval, Sanan Optoelectronics will also build and operate a new separate manufacturing facility for 8-inch SiC substrates, an important ceramic component for the semiconductor industry, mainly used in electric vehicles, rail transportation and wind and solar power transmission equipment.