The robustness of mature and specialty process node foundries continues to manifest. Unlike the distinct logic driving advanced nodes, the vitality of mature specialty processes is underpinned by downstream demand from automotive-grade chips, power devices, image sensors, and analog ICs.
During the Q3 earnings window, Hua Hong Grace and Nexchip have successively disclosed operational data and capital actions. Nexchip announced a 9.1 billion yuan capital increase plan for its Phase IV production line, while Hua Hong completed the consolidation of HLMC (Hua Li Micro). Both companies saw simultaneous improvements in capacity utilization and profitability levels, advancing their long-term capacity layouts.
SMIC, CanSemi Technology, United Nova Technology (UNT), and other local mature foundries are also aligning their capacity and capital plans with downstream demand rhythms. The wave of capacity expansion continues to unfold.
01、Hua Hong Grace: Completes HLMC Acquisition Consolidation; 12-Inch Business Share Rises to 70.7%
On November 5, Hua Hong Grace disclosed its Q3 2026 report. During the reporting period, the company completed the closing of the acquisition of 97.4988% equity in HLMC. With HLMC included in the consolidated financial statements, the scale and revenue share of the 12-inch wafer manufacturing business rose significantly, leading to substantial growth in current-period revenue and profits.
In the third quarter alone, the company achieved operating revenue of 6.706 billion yuan, up 13.95% year-on-year; net profit attributable to shareholders was 835 million yuan, up 136.14% year-on-year; net profit attributable to shareholders excluding non-recurring items was 616 million yuan, up 276.11% year-on-year. On a HKEX basis, quarterly sales revenue was USD 987.1 million, up 19.9% year-on-year and 9.9% quarter-on-quarter; gross margin was 24.6%, an increase of 7.6 percentage points year-on-year and 4.7 percentage points quarter-on-quarter. Excluding the impact of HLMC's consolidation, the original business generated sales revenue of USD 803.4 million with a gross margin of 19.9%, both exceeding the upper limits of previous performance guidance.
Cumulatively for the first three quarters, the company achieved operating revenue of 18.611 billion yuan, up 14.06% year-on-year; net profit attributable to shareholders was 1.603 billion yuan, up 138.23% year-on-year. This acquisition constitutes a business combination under common control, and the company has retrospectively adjusted comparative data from the same period last year.
After consolidation, Hua Hong Grace's 12-inch business revenue share reached 70.7%. The process platforms of the production lines have been supplemented, covering specialty logic, power devices, memory, and analog directions. Overall capacity utilization for this quarter reached 102.9%, with all production lines maintaining high-load operation.
The company's products primarily focus on foundry services for MCUs, embedded flash, PMICs, BCD, and power devices using specialty processes. Demand from AI, industrial applications, and automotive electronics continues to drive related orders. Management noted in the earnings commentary that tight supply in certain niche processes, coupled with rising wafer shipment volumes and average selling prices, were the core drivers of improved profitability.
Meanwhile, the company provided Q4 performance guidance: expected sales revenue range of USD 1.08–1.09 billion, and gross margin range of 25%–26%.
02、Nexchip Plans Joint Capital Increase of 9.1 Billion Yuan for Jingyi Integrated with Hefei Construction Investment and Hefei Qinhe
On the same day, Nexchip simultaneously unveiled a large-scale capital increase plan, introducing external capital for its Phase IV 12-inch production line subsidiary to further reinforce capacity construction.
The board of directors of Hefei Nexchip Integrated Circuit Co., Ltd. approved the capital increase plan. The company intends to sign a capital increase agreement with Hefei Jingyi Integrated Circuit Co., Ltd., Hefei Construction Investment Holdings (Group) Co., Ltd., and Hefei Qinhe Electronic Technology Co., Ltd. The three parties will collectively subscribe to 9.1 billion yuan in newly registered capital of Jingyi Integrated via cash contribution, at a price of 1 yuan per unit of registered capital.
Upon completion of this capital increase, Nexchip's shareholding in Jingyi Integrated will decrease from 100% to 63.96%. Jingyi Integrated will remain a controlled subsidiary of Nexchip and continue to be included in the group's consolidated financial statements.
The capital contribution structure for this increase is clear: Nexchip contributes 5.1 billion yuan, Hefei Construction Investment contributes 3.0 billion yuan, and Hefei Qinhe contributes 1.0 billion yuan. After the implementation of the capital increase, Jingyi Integrated's registered capital will rise from 2.0 billion yuan to 11.1 billion yuan. The remaining shareholders, Hefei Construction Investment and Hefei Qinhe, will hold 27.03% and 9.01% respectively.
Jingyi Integrated is the construction entity for Nexchip's Phase IV 12-inch wafer production line. The total project investment is 35.5 billion yuan, with a planned monthly capacity of 55,000 wafers. Processes focus on 40nm, 28nm CIS, OLED drivers, and logic chips, targeting markets such as display panels, smartphones, automotive, and AI. Jingyi Integrated was established in July 2025 and was previously a wholly-owned subsidiary of Nexchip.
On the evening of October 26, Hefei Nexchip Integrated Circuit Co., Ltd. disclosed its Q3 2026 report. Data shows that the company achieved operating revenue of 3.354 billion yuan in the third quarter, up 14.42% year-on-year and 10.15% quarter-on-quarter; net profit attributable to shareholders was 229 million yuan, up 5.23% year-on-year; net profit attributable to shareholders excluding non-recurring items was 191 million yuan. Gross margin for the single quarter was 26.38%, an increase of 4.29 percentage points quarter-on-quarter, indicating continued improvement in capacity utilization and product mix.
Cumulatively for the first three quarters, Nexchip achieved operating revenue of 9.310 billion yuan, up 14.52% year-on-year; net profit attributable to shareholders was 475 million yuan, and net profit attributable to shareholders excluding non-recurring items was 322 million yuan, up 41.32% year-on-year. In the financial report notes, the company stated that total profit for the quarter was 210 million yuan, up 28.33% year-on-year.
03、Local Mature Foundries Unfold Capacity Expansion Wave
According to TrendForce's latest wafer foundry industry research, the combined output value of the world's top ten wafer foundries in Q2 2026 increased by 11.5% quarter-on-quarter, approaching USD 53.49 billion, hitting a new record high. Growth momentum stems not only from persistent undersupply in advanced nodes for AI HPC main chips but also from synchronized growth in demand for AI peripheral ICs such as PMICs and Power Discretes. Additionally, the continuation of pre-stocking effects in consumer supply chains for TVs and PCs/laptops has led to tightening capacity in some mature process nodes. [Related Reading]
Beyond Hua Hong Grace and Nexchip mentioned above, local wafer foundries include SMIC, CanSemi Technology, United Nova Technology (UNT), and several other key players. The domestic track for28nm and 40nm mature specialty foundries is currently in a phase of concentrated expansion. Each company is leveraging its own resource endowments to pursue differentiated implementation paths.
As the domestic leader in wafer foundries, SMIC's most notable action this year was the acquisition of the remaining 49% equity in SMIC North, with a transaction consideration of 40.601 billion yuan. The equity closing was completed in June, making SMIC North a wholly-owned subsidiary. SMIC North focuses on 12-inch wafer foundry services for nodes of 28nm and above, with a designed monthly capacity of 75,000 wafers. Its process platforms cover logic, low-power logic, image sensors, high-voltage drivers, and embedded memory directions.
Regarding production lines under construction, the Shanghai Lingang (SMIC East) 12-inch project continues to progress. Phase I is ramping up steadily, while the filing for re-inspection of the construction layout for Phase II Lot I was completed in October this year, continuously expanding 12-inch mature process capacity. The construction design scheme for the SMIC Xiqing 12-inch wafer foundry production line project (Phase II) was approved at the end of September and publicly announced in early October. This project was officially announced in August 2022, planning to cover mature processes from 28nm to 180nm, targeting demand for analog, power, and logic chips, thereby continuously supplementing core domestic mature process capacity.
CanSemi Technology, a local specialty foundry vendor that listed on the ChiNext Board in October this year, has achieved stable full-capacity operation for its Phase I and II lines, with capacity from Phase III continuing to release. By the end of 2025, monthly capacity reached 63,300 wafers. The company is one of the earlier domestic firms to build a 12-inch silicon photonics wafer process platform, with specifications covering 400G, 800G, and 1.6T optical modules, while simultaneously advancing Near-Packaged Optics (NPO) process verification.
The total investment for CanSemi Technology's Phase IV project, which it is promoting, is approximately 25.2 billion yuan, planning to add a monthly capacity of 40,000 12-inch wafers. Processes cover 65nm to 22nm, focusing on platforms such as silicon photonics, optoelectronic integration, high-end CIS, and embedded memory, targeting tracks like AI optical interconnects, automotive, and industrial electronics. The project is expected to be completed and put into production by the end of 2029. Once fully operational, CanSemi's overall monthly capacity will reach 120,000 wafers.
United Nova Technology (UNT), upon consolidating its 8-inch power foundry capacity base, officially announced the Shaoxing Phase IV automotive-grade 12-inch production line project in June this year, completing the paid-in subscription for the project entity, UNT Advanced, in September. The project plans for a monthly capacity of 50,000 12-inch wafers, with a total investment of approximately 20 billion yuan. Capital funds are jointly raised by the listed company, local industrial funds, and market-oriented capital. It focuses on 40/28nm MCUs, DSPs, 90/55nm BCD, DrMOS, as well as 55nm silicon photonics and laser driver chips, targeting the NEV, industrial control, and AI server power supply markets.
Overall, the wave of capacity expansion among local mature foundries is actively unfolding. These 28nm and 40nm process solutions are mature, with sufficient supporting equipment supply, making them mainstream nodes for domestic mature foundry expansion. The focus of each company's expansion varies; some target high-barrier markets like automotive and industrial applications, while others center on AI-supporting chips such as CIS, analog power, and silicon photonics. Currently disclosed information reflects phased projects and financial signals; the supply-demand landscape after new capacity releases still requires continuous tracking and observation.