Beijing will spend 33 billion yuan ($4.6 billion) to build a 12-inch wafer manufacturing facility, led by state-owned enterprises and funds, marking another step in China’s efforts to boost domestic semiconductor production

Leading companies involved in the new facility include Beijing Yandong Microelectronics (YDME), which is listed on Shanghai’s Star Market, and BOE Technology, China’s top display manufacturer.

YDME said on Saturday it will invest 4.99 billion yuan in Beijing Electronics IC Manufacturing, the subsidiary of state-owned Beijing Electronics Holding that is behind the wafer fab project. The deal will give YDME a controlling position with a 24.95 percent stake in the project, backed by a partnership agreement, according to a company filing.

In a separate filing the same day, Shenzhen-listed BOE revealed it would invest 2 billion yuan for a 10 percent stake in the project.

Other participants include subsidiaries of Beijing Yizhuang Investment, Beijing State-owned Capital Operation and Management and ZGC Group. Together, the shareholders will contribute 20 billion yuan, with the remaining funding to be raised from debt financing.

YDME noted in its filing that China’s integrated circuit (IC) market is expected to reach a domestic production rate of 21.2 percent in 2026, up from 16.7 percent in 2021. It expects a significant supply-demand gap to emerge for mature nodes, with features at the 28-nanometer level or more, and a production capacity of 370,000 wafers per month by 2027.