(Yicai) Sept. 14 -- Shares in Grandit surged by as much as 6.4 percent today after the Chinese semiconductor electronic materials supplier said its joint-venture acquisition vehicle will invest CNY1.1 billion (USD164 million) to construct a high-purity semiconductor quartz materials factory to meet growing domestic demand for this high-end material.

Grandit’s share price [SHA: 688549] closed up 4 percent at CNY22.98 (USD3.43). Earlier in the day it hit CNY23.50.

Jingheng Xidao (Shanghai) Technology, which was set up by Grandit and quartz-materials supplier Ningbo Yunde Materials in 2024, plans to build a high-purity quartz materials production facility in Quzhou, southeastern Zhejiang Province with an annual production capacity of 2,220 tons, Grandit said yesterday.

The facility will produce key basic auxiliary materials for integrated-circuit manufacturing, Grandit said. The supply of these materials has long been concentrated in the hands of a few overseas manufacturers.

The first phase of the project is expected to involve an investment of around CNY333 million (USD50 million), with planned output of 720 tons of high-purity quartz materials a year, said Grandit, which is also based in Quzhou. Construction is expected to begin within six months after the land transfer agreement is signed, and the facility is scheduled to be completed and put into operation within 28 months.

The actual investment amount and construction details for the second phase will be reviewed and determined based on the progress of the first phase, as well as business development and market conditions at that time, it said.

The implementation of the project is expected to help establish large-scale supply capacity for these high-end materials in China, while expanding Grandit's overall competitiveness and influence across the semiconductor materials industry chain, the firm said.

Jingheng Xidao was established by Grandit and Ningbo Yunde two years ago specifically to acquire Heraeus Conamic UK, a supplier of high-purity quartz products to customers in the global semiconductor and optical industries, for a maximum consideration of GBP14.1 million (USD18.8 million).

Grandit announced a capital boost for Jingheng Xidao in a separate statement yesterday to fund the project’s construction and technology acquisition. The funds will primarily be used to introduce Heraeus Conamic UK's production technology for high-purity semiconductor quartz materials and establish large-scale production capabilities.

Grandit and five private-equity investment funds will collectively increase their capital in Jingheng Xidao by CNY180 million (USD26.8 million), Grandit said. Grandit will contribute CNY100 million, while Jingheng Xidao’s other existing shareholders will waive their rights to participate in the capital increase.

Once the transaction is completed, Grandit's shareholding in Jingheng Xidao will be diluted to no less than 36.96 percent from 44.75 percent, but it will still remain the biggest shareholder, it said.

Editor: Kim Taylor