On October 30, TCL Zhonghuan Renewable Energy Technology Co., Ltd. (002129.SZ) issued a trading suspension announcement, planning to acquire a minority stake in Zhonghuan Leading, in a move to seize the upcycle in the semiconductor industry, expand its semiconductor materials business, and strengthen its core competitiveness and sustainable development capacity.
TCL Zhonghuan focuses on two core businesses: new energy photovoltaics and semiconductor materials. Its controlled subsidiary Zhonghuan Leading serves as the operating entity for the company's semiconductor materials business, in which the company holds a 32.72% stake. Zhonghuan Leading traces its origins to the Tianjin Semiconductor Materials Factory established in 1958, one of China's earliest enterprises engaged in semiconductor materials production. It possesses dual manufacturing processes for zone melting and Czochralski crystal growth. After more than six decades of development, it has grown into one of the few semiconductor wafer manufacturers globally with a full-size, multi-platform product layout. The company is committed to "providing full-product solutions for global customers," serving applications including logic, memory, power, analog, and image sensors.
In the first three quarters of 2026, Zhonghuan Leading achieved revenue of 4.90 billion yuan, up 15% year-on-year, reaching overall break-even. In the third quarter, it recorded revenue of 1.86 billion yuan, up 23% year-on-year, with net profit of 80 million yuan, achieving operating profitability on a quarterly basis.
Demand drives the semiconductor wafer industry into an upcycle, with Zhonghuan Leading's performance continuing to lead domestically
Global semiconductor industry sentiment continues to rise. From a global market perspective, updated estimates published by WSTS in August 2026 show that after incorporating actual second-quarter data, the global semiconductor market size for 2026 is expected to reach approximately 1.66 trillion US dollars, representing year-on-year growth of about 108%. Annual forecasts released by SEMI on October 21 indicate that global wafer shipment area in 2026 is expected to grow 11.8% year-on-year to 14,420 MSI (million square inches).
In the first three quarters of 2026, sustained expansion of AI and computing power demand drove up demand for logic and memory chips. Recovery in demand from new energy vehicles, photovoltaic energy storage, and industrial control sectors boosted power and analog chip demand, with the semiconductor industry showing a structural recovery. 12-inch wafers benefit from AI computing power, HPC, advanced memory, and logic chip demand. 8-inch wafer demand is gradually recovering, supported by automotive-grade power, industrial, and power management chips, with AI server power demand forming an incremental driver. 6-inch wafers are seeing structural improvement, mainly serving MEMS, sensors, small-to-medium power discrete devices, and small-signal analog chips. Demand is strong for high-value-added specialty wafers such as advanced lightly doped polished wafers, heavily doped substrates, and power epitaxial wafers, with high-end specification products in structural short supply and prices entering a repair and upward cycle.
Compared with domestic peers, Zhonghuan Leading maintains a top-tier position in both revenue scale and profitability in China, demonstrating strong industry competitiveness and market influence. According to 2025 annual report data, Zhonghuan Leading reported operating revenue of 5.707 billion yuan, Shanghai Silicon Industry reported 3.716 billion yuan, and Xi'an Yicai reported 2.649 billion yuan. Based on the above disclosure basis, Zhonghuan Leading's revenue was approximately 1.54 times and 2.15 times that of the two companies, respectively. In the first three quarters of 2026, Shanghai Silicon Industry reported operating revenue of 3.637 billion yuan and a non-GAAP net loss attributable to parent of 1.332 billion yuan, while Xi'an Yicai reported operating revenue of 2.651 billion yuan and a non-GAAP net loss attributable to parent of 473 million yuan. Zhonghuan Leading reported operating revenue of 4.90 billion yuan and achieved operating profitability in the third quarter, further highlighting its competitive advantages.
Overseas business and multi-size, multi-process layout support long-term development
TCL Zhonghuan's third-quarter report shows that Zhonghuan Leading's product shipment scale remains a domestic leader, with product and customer mix continuing to optimize. In the first three quarters of 2026, Zhonghuan Leading achieved shipments of 1,101 MSI, up 21% year-on-year, with 12-inch product shipments up 24% year-on-year and 8-inch and below product shipments up 18% year-on-year, with rapid growth across all product sizes. The company continues to increase shipments to leading global chip manufacturers. In the first three quarters of 2026, overseas operating revenue reached 1.14 billion yuan, up 19% year-on-year, with overseas business having become an important part of the company's revenue.
Zhonghuan Leading continues to ramp up overseas market development, with sales and service networks in Singapore, Japan, South Korea, and Europe, completing a global market layout, while global customer coverage and international supply capabilities continue to strengthen. Looking at the development paths of leading global wafer manufacturers, a multi-size, multi-process, multi-product form layout is the industry's mainstream direction. Leveraging the company's existing product matrix, according to Zhonghuan Leading's official website, its products cover 4-12 inches and it masters core processes including zone melting and Czochralski, fully adapting to multiple application scenarios such as logic, memory, power, analog, and image sensors. Compared with companies focused on a single size or niche track, it possesses broader application coverage boundaries.
Along with rising shipment scale, Zhonghuan Leading's product and customer mix continues to iterate and optimize. According to TCL Zhonghuan's third-quarter report, the company's wafer products for the memory and logic sectors continue to ramp up rapidly, with market share in the top tier domestically. Specialty process products such as power, image sensor (CIS), and zone-melted wafers focus on high-value-added niche markets, maintaining an absolutely leading market share. The full-size, multi-category product reserves can fully respond to customers' long-term, diversified needs, and multiple product routes also help reduce dependence on a single market or single product. On top of its full product structure, Zhonghuan Leading continues to expand multi-size capacity, seizing demand at different stages, enhancing cyclical resilience, and improving its global competitive position, providing a broader business foundation.
Capacity construction and technology validation connect to the next stage of development
The semiconductor wafer industry is a capital-intensive track, where R&D investment, customer certification, and capacity ramp-up all require long-term capital input. Sufficient revenue scale can provide solid business support for technology iteration and production line construction. In terms of capacity planning, Zhonghuan Leading is orderly advancing 8-inch production line upgrades and 12-inch project construction, further improving multi-size product supply capability. It is expected that by the end of 2026, combined 12-inch capacity in Yixing and Xuzhou will increase to 1 million wafers per month. The company will steadily advance capacity upgrades, accelerate construction of the Shenzhen 12-inch factory, and continue to promote 8-inch capacity upgrades at the Yixing and Tianjin bases as well as supporting crystal capacity ramp-up at the Inner Mongolia base. After all five major production bases reach full production, the company's 12-inch and 8-inch wafer capacity will reach 2.1 million wafers per month and 1.4 million wafers per month, respectively, matching market supply for logic and memory chips, mature process and specialty process products, and is expected to enter the ranks of the world's top five semiconductor wafer manufacturers.
While expanding production, Zhonghuan Leading will also continue to increase investment in advanced technology and process R&D, accelerating R&D and validation of products such as high-end logic and memory wafers, high-end packaging wafers, and high-end specialty processes. Through long-term supply agreements (LTA) to lock in orders during the capacity ramp-up period, deepen strategic cooperation with core customers, increase strategic supply share, and orderly advance validation and introduction of advanced and high-end products. Looking ahead, the semiconductor wafer industry requires long-term R&D and mass production accumulation, and demand rhythms differ across applications. The company will steadily advance product development, customer certification, and capacity construction, and through quality improvement and cost reduction and efficiency enhancement, continuously strengthen delivery capability and operational efficiency across multiple product categories, achieving high-quality and steady development.
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