Commencement of construction of Hua Hong's newest base for IC research, development and manufacturing

WUXI,China,July 25,2018 -- A Commencement Ceremony was held for the first set of 2018 major projects in the Wuxi High-Tech Development Zone in the first half of the year,marked by the start of construction of Hua Hong's IC research,development and manufacturing base in Wuxi.

The rapid development and increased investment into applications such as cloud computing,internet of things,big data,smart city and 5G communications have driven up the demand for products that can be manufactured economically and in sufficient volume on 300mm wafers. This is particularly true in the PRC. Strategically one cannot afford to miss the window of opportunity to take advantage of this growing and highly profitable market. For this reason,Hua Hong has taken the strategic step of founding a new 300mm wafer fabrication facility in Wuxi.

To build and operate the facility,the joint venture Hua Hong Semiconductor (Wuxi) Limited ("HH-Wuxi") was founded on February 14,2018,by Hua Hong Semiconductor and HHGrace together with China Integrated Circuit Industry Investment Fund Co.,Ltd. and Wuxi Xi Hong Lian Xin Investment Co.,Ltd.

HH-Wuxi will deliver the combined power of capital,technology and industry might and play a vital role in enhancing the competitiveness of China's IC industry and in promoting synergy among various parts of the value chain. It will join HHGrace's three 200mm wafer fabs in Shanghai,all four of which will be operated in a coordinated and efficient manner to maximize business success for all and best serve diverse customers with specialized technologies.

Covering 46.6 hectares,the project represents a total investment of USD10 billion. USD2.5 billion will be invested in the first phase to set up a fabrication line at the 90nm and 65nm/55nm technology nodes. In just 7 months all the preparatory tasks,including the environment impact assessment,land acquisition,planning and EPC bidding,were fulfilled. According to plan,civil engineering will be completed in the first half of 2019,followed by clean room construction,installation of power and electromechanical equipment and delivery of the completed plant in the second half of 2019. Production is planned to commence during the 4th quarter of 2019,with the monthly capacity targeted to ramp from 10,000 wafers at the end of 2019 up to 40,000 wafers by the end of 2022. Annual output is expected to reach RMB 5 billion. Thereafter,the additional wafer fabrication lines will be ramped.

About Hua Hong Semiconductor (Wuxi) Limited (HH-Wuxi)

A joint venture by Hua Hong Semiconductor and its wholly owned subsidiary HHGrace,together with China Integrated Circuit Industry Investment Fund Co.,Ltd. HH-Wuxi will be a leading IC research,development and manufacturing base. In the first phase,USD2.5 billion will be invested to reach a monthly 300mm wafer fabrication capacity of circa 40,000.

HH-Wuixi,along with Hua Hong Semiconductor Limited and HHGrace,is a part of the Huahong Group.

For more information on the company,please visit: www.huahonggrace.com

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