Hefei's approach to developing its semiconductor industry is rooted in strategic policy support and the creation of strong industrial ecosystems. By leveraging government power to push forward key large-scale projects, the city has successfully attracted a wide range of upstream and downstream companies through resource aggregation. This model has been central to Hefei’s growth in the integrated circuit sector, with the city becoming one of the fastest-growing hubs in China for semiconductor development.
One notable example is the establishment of Shixin Electronics’ R&D center in Hefei’s Hi-tech Zone in 2016. As a leading provider of Fabless ASIC chip design services, the company emphasized that Hefei had already laid a solid foundation in the integrated circuit industry, supported by strong educational resources, talent pools, and favorable policies. The decision to set up operations there was made quickly and decisively.
This trend isn't unique to Shixin. Over the years, numerous semiconductor firms, including Powerchip, MediaTek, Qunlian Electronics, Tongfu Microelectronics, and Junzheng Group, have chosen Hefei as their base. Some are emerging Chinese players, while others are well-established Taiwanese firms with long-standing experience in the field.
Starting from the "Twelfth Five-Year" Plan, Hefei has accelerated the development of its integrated circuit industry, building a comprehensive supply chain that covers design, manufacturing, packaging, and testing. The city has now become one of the nine national integrated circuit development bases and one of the 14 key cities for semiconductor industry growth.
Zhu Shengli, deputy director of the Hefei New Station High-tech Industrial Development Zone Management Committee, highlighted three main motivations behind Hefei’s focus on semiconductors: upgrading traditional industries like home appliances and automobiles, leveraging the talent advantage from local universities, and drawing from the successful experience of developing new display technologies and large-scale projects.
The logic behind Hefei’s strategy, starting with BOE, continues today. The city now holds one of the three major memory projects in the country, showcasing its growing influence in the sector.
State-owned enterprises have played a crucial role in this development. For instance, Hefei Jinghe Integrated Circuit Co., Ltd., established in 2015, became the first 12-inch wafer foundry in Anhui Province. It was co-founded by Hefei Construction Investment Holdings, the core screen industry investment fund, and Taiwan-based Powerchip Technology. This collaboration exemplifies the city's ability to attract and integrate foreign expertise with local resources.
In addition to direct investments, Hefei has also created multiple industrial investment funds to support startups and mid-sized companies. These include the Hefei Hi-tech Zone Angel Investment Fund, which focuses on early-stage ventures, and the Zhongxing Hechuang IC Fund, which supports more mature enterprises.
Capital markets have also played a significant role in Hefei’s rise. The city used a market-based approach to finance BOE’s 6th generation TFT-LCD production line, raising over 12 billion yuan from strategic investors, including state-owned entities. This success led to further investments in related industries, such as Xinyu PDP, Rainbow Display, and LED projects, creating a complete new display industry chain.
The memory chip manufacturing project, led by Hefei Changxin Integrated Circuit Co., Ltd., required an investment of 53.4 billion yuan. Such large-scale projects demand continued financial backing, and Hefei has shown a willingness to invest heavily in long-term growth.
With its proactive policies, strong industrial ecosystem, and strategic use of both public and private capital, Hefei is positioning itself as a major player in the semiconductor industry. Whether it can create a "second BOE" remains to be seen, but the city's momentum is undeniable.
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