Red Avenue Accelerates Expansion Into Chip Chemicals Amid China's Semiconductor Self-Reliance Push

Benzinga_recent_news02-13

The firm is accelerating its expansion into the specialist materials used to make semiconductors, as China seeks supply-chain resilience in key sectors image credit: Bamboo Works The driving force for...

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The driving force for China's semiconductor industry right now can be summed up in one word – self-reliance.With global trade relationships in a fraught state of flux, China's state-led push for technological independence and control over supply chains has taken on added urgency, particularly in the critical chip sector.The drive to substitute domestic products for imports is underway across the product cycle, from chip design and fabrication equipment to semiconductor consumables, forcing some traditional chemical companies to rethink their roles in the industry.Red Avenue New Materials Group Co. Ltd. is one of those shapeshifters. Initially a supplier of rubber additives for tires, it has chosen to stake its future on high-risk, high-barrier advanced materials for high-tech use. The Shanghai-listed firm is still in the business of ti","collect":0,"end_time":0,"defaultTopTitle":"benzinga.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"603650":"彤程新材","BK4544":"ARK ETF合集","SOXX":"iShares费城交易所半导体ETF","BK4585":"ETF&股票定投概念","BK4588":"碎股","USD":"ProShares Ultra Semiconductors","BK4535":"淡马锡持仓","ARKG":"ARK Genomic Revolution ETF","BK0229":"化学制品"},"translate_title":"在中国半导体自力更生的推动下，Red Avenue加速向芯片化学品领域扩张","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"603650":1,"SOXX":0.72,"ARKG":0.9,"USD":0.72},"content_text":"The firm is accelerating its expansion into the specialist materials used to make semiconductors, as China seeks supply-chain resilience in key sectors\nimage credit: Bamboo Works\nThe driving force for China's semiconductor industry right now can be summed up in one word – self-reliance.\nWith global trade relationships in a fraught state of flux, China's state-led push for technological independence and control over supply chains has taken on added urgency, particularly in the critical chip sector.\nThe drive to substitute domestic products for imports is underway across the product cycle, from chip design and fabrication equipment to semiconductor consumables, forcing some traditional chemical companies to rethink their roles in the industry.\nRed Avenue New Materials Group Co. Ltd. (603650.SH) is one of those shapeshifters. Initially a supplier of rubber additives for tires, it has chosen to stake its future on high-risk, high-barrier advanced materials for high-tech use. The Shanghai-listed firm is still in the business of tire chemicals but is increasingly focused on the chemical-based materials for chip manufacture such as solvents, light-sensitive polymers and polishing pads.\nAs such, it is one of the few companies in the new materials sector to span two distinct industries. And it is looking for funds to support further expansion, having recently filed for a secondary listing in Hong Kong.\nRed Avenue has a striking backstory, founded in 1999 by a 25-year-old biochemistry graduate, Zhang Ning. She started out distributing rubber additives for tires, a low-margin trade that relied on forging close relationships with customers and ensuring dependable supply. The experience gave her a deep understanding of the tire industry's value chain.\nStarting in 2006, Red Avenue began building its own manufacturing facilities in Jiangsu province, while also establishing centers for testing and R&D. The move marked a formal transition from distributor to manufacturer. The company gradually secured core formulations and production capabilities for specialty rubber additives, laying the groundwork for its 2018 listing in Shanghai.\nAs the original business matured, Zhang led the company into chemicals for electronics and chip production, executing a tricky leap up the value chain. Through acquisitions and building in-house capacity, Red Avenue moved into semiconductor photoresists, display panel materials, high-purity solvents and wafer polishing pads. In 2024, the company invested in building its own production base for polishing pads, which play a key role in wafer fabrication.\nAs the company transformed, the spotlight fell on the founder's family situation. It was disclosed in 2023 that shares previously held jointly with Zhang's husband had been transferred back to her. Control of the listed company became solely vested in Zhang while her ex-husband, Liu Dongsheng, exited without an equity stake.\nZhang's stake was valued at roughly 13.9 billion yuan ($2 billion) at the time, prompting media to label the break-up a \"10 billion yuan divorce\". In fact the couple's divorce was the final step in a capital restructuring, as Zhang's husband had been cashing out through share sales in 2022. The remaining holdings were diluted via a private placement and Zhang regained full corporate control. Only afterwards was the divorce revealed.\nThe outcome was largely win-win: the ex-husband walked away with cash, while the listed company maintained stability. On the day the news broke, the stock slipped just about 1% and observers praised the founder's acumen in managing the situation.\nProfitability has also been enhanced. Net profit for the first nine months of last year reached 511 million yuan, up about 12.8%. Overall gross margin improved from 23.3% in 2023 to 25.2% in the first three quarters of 2025, with margins on electronic materials exceeding 30% at one point. While tire materials remain a source of cash flow, electronic materials are increasingly becoming the growth engine.\nRed Avenue may offer a compelling narrative, with a youthful entrepreneur seizing the initiative and adapting with the times. But whether investors are willing to buy into that story will depend on the company's ability to scale up its business and complete the transition to advanced materials.\nTo subscribe to Bamboo Works weekly free newsletter, click here\nBenzinga Disclaimer: This article is from an unpaid external contributor. It does not represent Benzinga’s reporting and has not been edited for content or accuracy.\nTo add Benzinga News as your preferred source on Google, click here.","kind":"highlight","is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"1","news_tag":"corporation","news_rank":0,"isVideo":false,"video":null,"symbols":[],"gpt_button":0,"need_auth":false,"code":"91000000","status":"200"},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"tenantId":"TBGLOBAL","deviceId":"web-server-community-laohu8-v3","version":"4.39.0","shortVersion":"4.39.0","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2611152423","isCrawlerRequest":true}