(Yicai Global) June 17 -- Sanan Optoelectronics will build a CNY16 billion (USD2.3 billion) factory in the Chinese city of Changsha to meet high demand for third-generation chips.

Completion of the project's first phase will take two years, the Xiamen-based firm said in a statement yesterday. The second part will be ready within four years of the project’s start. The new factory will enhance Sanan's industrial positioning and core competitiveness, it added.

The emerging field of third-generation semiconductors, based on materials such as silicon carbide, gallium nitride, and zinc oxide, is touted as the next level of chips to support new technologies such as fifth-generation wireless networks, smart grids, and new energy vehicles.

Sanan's stock price [SHA: 600703] climbed 1.7 percent today to end at CNY22.98 (USD3.20). The benchmark Shanghai Composite Index was little changed.

The stock slumped earlier this week after Sanan’s second-largest shareholder, China Integrated Circuit Industry Investment Fund, said that it will sell as much as 2 percent of the firm's outstanding shares in the next six months.

Editor: Emmi Laine