Longtu Photomask Plans to Raise Funds Not Exceeding 1.46 Billion Yuan to Deploy 40nm-28nm Semiconductor Mask Production Capacity

Longto Photomask (688721) announced on the evening of March 23 that the company plans to raise no more than 1.46 billion yuan through a targeted issuance of shares, with the proceeds after issuance costs to be used for the construction of a 40nm–28nm semiconductor mask production line. “Once the project is implemented, the company expects to fill the domestic market gap for 40nm–28nm process node semiconductor masks, further enhance its technological capabilities, accelerate product development speed, and improve the conversion rate of R&D achievements,” Longto Photomask stated. The implementation and realization of the project will significantly improve the company’s technological strength and operational scale, greatly strengthening its overall competitiveness.

In Longto Photomask’s view, the deployment of 40nm–28nm process products is not only an expansion and continuation of the company’s previous fundraising projects but also an essential step for maintaining industry leadership and consolidating market competitiveness. “Currently, the company has achieved mass production and shipment of 90nm process node products, and 65nm products have also begun sample validation,” the company said. With the rapid development of the semiconductor industry in mainland China and the continuous advancement of wafer manufacturing process nodes, the company needs to proactively deploy higher process node products to maintain technological progress and product leadership, as well as to meet the increasing demand for masks from domestic wafer manufacturers.

Longto Photomask pointed out that the 28nm process capability is a core benchmark for measuring the technological strength of domestic mask companies. From the industry landscape, the third-party mask market generally considers 28nm as an important dividing line: on one hand, in the advanced process fields below 28nm, overseas mask manufacturers hold first-mover advantages and industry chain clustering benefits; meanwhile, due to trade sanctions, export controls, and other factors affecting China’s semiconductor industry, very few domestic companies are capable of independently mass-producing masks below 28nm. On the other hand, breaking through the 28nm process technical barrier is a key pathway for Chinese third-party mask companies to build differentiated competitive advantages and consolidate market position, as well as a necessary requirement for maintaining technological leadership.

Regarding market competition, currently, mask products above 130nm have entered the late stage of domestic substitution, with competition becoming more apparent and the market size struggling to sustain rapid growth. Mask products in the 130nm–65nm range are in the rapid phase of domestic substitution, with downstream customers relatively concentrated, and domestic mask manufacturers engaged in sample validation or bulk supply. Masks in the 40nm–28nm range are in the early stage of domestic substitution, with domestic mask factories still in the layout phase. Due to the high investment intensity and technical requirements for this process interval, customers are highly concentrated.

Longto Photomask candidly stated that if the company fails to timely follow up on capacity deployment and technological implementation for the 40nm–28nm process, it will face a passive situation in the reshaping of the market competition landscape: not only risking missing out on incremental opportunities for domestic substitution in the 40nm–28nm mask market but also potentially losing existing customer relationships due to lagging technological iteration.

The company noted that among the major wafer fabs expanding capacity for the 40nm–28nm process nodes in China, Huahong Semiconductor, Silan Microelectronics, Yandong Micro, Yuexin Semiconductor, and Jita Semiconductor are its current key customers. Huahong Semiconductor, Silan Microelectronics, and Yandong Micro are also strategic shareholders, with long-standing strategic partnerships. The company’s existing customers are expected to have substantial future demand for 40nm–28nm masks. Good customer relationships will facilitate rapid completion of sample validation work, and the project is expected to smoothly absorb the related capacity after commissioning.

When mask manufacturers sell masks to downstream customers, they typically sell complete sets, with each set containing masks for different process nodes. Only a few critical layers use the highest process technology, while the non-critical layers, for cost reasons, usually employ lower process nodes. Therefore, after the current fundraising project expands to higher process nodes such as 40nm–28nm, the future orders for these higher process masks will also drive demand for existing products above 65nm.