(Yicai) Oct. 24 -- Shares in San’an Optoelectronics climbed as much as 3.8 today after the Chinese semiconductor manufacturer said that its silicon carbide factory, which will supply the firm’s auto chip joint venture with Swiss tech giant ST Microelectronics once it is finished, has started mass production on a small scale.

Sanan’s share price [SHA:600703] closed up 2.7 percent at CNY14.47 (USD2) today. Earlier in the day it hit CNY14.63.

The plant, which is located in the automobile hub of Chongqing in southwestern China, has begun to produce samples of eight-inch silicon carbide devices which are being tested by Xiamen-based San’an and its clients, a company insider told Yicai.

Costing CNY7 billion (USD958.2 million), the factory will supply silicon carbide to the USD3.2 billion car chip JV between San’an and ST Micro that is under construction in Chongqing.

Parts made from silicon carbide are resistant to high pressure, high temperatures and erosion and are in big demand in the new energy vehicle sector.

San’an is trying to tap into the fast-growing auto chip market through the tie-up as its main business of light emitting diode chips is not doing well.

San'an holds a 51 percent stake in the JV and the Geneva-based partner the rest, the two parties said in June. Manufacturing is expected to start in the fourth quarter of 2025 and full production in 2028.

The company’s indirect controlling shareholder Fujian San’an Group, which owns 29.3 percent equity, will inject between CNY50 million (USD6.8 million) and CNY100 million in the next month to increase its stake and support the new endeavor, San’an said yesterday.

San'an's net profit sank 81.8 percent in the first half from a year earlier to CNY170 million (USD23.3 million), while revenue tumbled 4.3 percent at CNY6.5 billion, according to the company’s interim results.

Editors: Dou Shicong, Kim Taylor