(Yicai Global) Aug. 28 -- Hangzhou Silan Microelectronics will further increase its microchip manufacturing capacity by expanding its production line at a cost of CNY1.5 billion (USD210 million).

Of these funds, CNY500 million (USD70 million) will come from a government industrial fund formed by Beijing and several central enterprises, the company announced yesterday.

The project will have a five-year construction cycle divided into two phases, per the announcement. The first stage, whose investment is projected at CNY600 million, will realize annual production of 180,000 eight-inch chips. Phase two, with planned spending of CNY900 million, will achieve a yearly output of 252,000 eight-inch integrated circuits, per the announcement.

The state National Integrated Circuit Industry Investment Fund will contribute a total of CNY500 million via a project company, Silan said in the announcement, providing about CNY300 million of its own funds, with financial institutions supplying the rest.

This investment fund formed through a pooling of resources by China's Ministry of Finance, China National Tobacco, China Mobile Communications and several other state-backed enterprises. It invests exclusively in the electronics industry, and previously infused financing into China's biggest chipmaker Tsinghua Unigroup.

The company started construction of a CNY1 billion eight-inch microprocessor production line in July 2016, which went into official operation at the end of June 2017, gradually increasing production to 298,600 chips in 2018. This project was still operating at a loss in the first half of this year, however, company data show.

Editor: Ben Armour