On the evening of August 11, Yuanjie Semiconductor Technology Co., Ltd. announced plans to invest approximately 42.68 billion yuan (including land transfer fees) in the "Yuanjie Semiconductor Technology Industrial Park Project" located in Fengxi New City, Xixian New District, Shaanxi Province. The project includes a laser chip production line, manufacturing facilities, and supporting infrastructure. The announcement clearly states that the project aims to "break through capacity bottlenecks and expand the scale of high-end laser chip production." This is the largest single investment by Yuanjie Semiconductor Technology Co.,Ltd. since its listing, and combined with the 12.51 billion yuan second-phase R&D and production base project in Xixian New District announced in February, the company's cumulative expansion plans disclosed in 2026 have exceeded 55 billion yuan.
The decision to invest 42.68 billion yuan in expansion makes clear logical sense when viewed against Yuanjie Semiconductor Technology Co.,Ltd.'s first-half 2026 performance. On July 21, the company released a semi-annual performance forecast: it expects revenue of 900 million to 950 million yuan for the first half of 2026, a year-on-year increase of 339.13% to 363.53%; net profit attributable to shareholders of 600 million to 650 million yuan, a year-on-year increase of 1196.91% to 1304.98%; and non-GAAP net profit of 500 million to 550 million yuan, a year-on-year increase of 1001.87% to 1112.06%. In the first quarter alone, the company achieved revenue of 355 million yuan, up 320.94% year-on-year, and net profit attributable to shareholders of 179 million yuan, up 1153% year-on-year. The company's announcement attributes the significant revenue growth primarily to an increase in data center business revenue. As the data center business's share of total company revenue rises, the company's overall gross margin has improved. If the company's first-half net profit attributable to shareholders of 600 million to 650 million yuan is annualized, this expansion plan represents approximately three times the full-year profit.
When first-half revenue approaches the 1 billion yuan level, existing production capacity is nearing its limit. Without expansion, growth would inevitably slow down in the second half of the year. The phrase "break through capacity bottlenecks" in the announcement directly points to this reality constraint. This supply-demand imbalance was repeatedly highlighted by the US optical module leader AAOI during its latest quarterly earnings call. Management admitted that short-term revenue growth is almost entirely constrained by capacity and key component supply, with customer demand exceeding the company's supply capacity by approximately 20% to 40%. They expect this supply shortage to continue until mid-2027, and AAOI plans to expand its capacity approximately tenfold within two years.
Chinese manufacturers are also racing against time: Dongshan Precision Manufacturing subsidiary Source Photonics is investing approximately 12 billion US dollars (about 81 billion yuan) in Changzhou and other locations to build optical chips and optical module expansion projects, making it the largest domestic initiative. Shijia Photonics plans to invest 12.65 billion yuan to increase production of high-speed optical chips, and the country's first 8-inch silicon-based photonic chip mass production line has already started construction. The cross-industry entrant Zhaochi Co., Ltd. has also invested a total of about 1 billion yuan in the first phase of a laser chip and high-speed optical module project, planning an annual output of 100 million optical communication semiconductor laser chips, and has already configured 20 cavities of MOCVD equipment. The optical module leader Zhongji Innolight has taken a different path. In the first quarter of 2026, its prepayments surged from 134 million yuan to 1.488 billion yuan, using substantial prepayments to lock in upstream core materials rather than building large-scale self-owned chip production lines, while relying on its subsidiaries to advance silicon photonic chip self-development.
The market responded positively to Yuanjie Semiconductor Technology Co.,Ltd.'s 42.68 billion yuan expansion plan. On August 12, the day of the announcement, the company's stock opened at 1365.00 yuan and continued to rise, reaching 1468.74 yuan at the time of writing. This article solely represents the author's views and does not constitute investment advice.
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