In an effort to push for chip self-sufficiency, China’s top chip maker SMIC will...

In an effort to push for chip self-sufficiency, China’s top chip maker SMIC will build a USD 9 billion factory in Shanghai

In an effort to push for chip self-sufficiency, China’s top chip maker SMIC will build a USD 9 billion factory in Shanghai

September 4, 2021 2:25 pm

China’s top chipmaker Semiconductor Manufacturing International Corporation (SMIC) announced plans to build a new USD8.87 billion factory in Shanghai, in an effort to boost production to meet demand for chip amid global shortage.  

Detail:

The Shanghai and Hong Kong dual listed company has inked an agreement with a Shanghai government-backed entity to build a new 28-nanometre fabrication plant in the city’s free-trade zone.

Under the terms of agreement, SMIC will set up a joint venture with the Pilot Free Trade Zone Lin-Gang Special Area Administration for registered capital of USD5.5 billion. SMIC will control 51 per cent of the venture, while an investment arm of Shanghai municipal government will take 25 per cent.  

Zhao Haijun, SMIC’s co-CEO, highlighted the current chip supply shortage would last until at least the end of this year. He also outlined two main challenges facing the company.

"The market demand is strong. But our current production capacity cannot fulfill customer needs and every market segment faces shortages. Secondly, certain restrictions on the company's supply chain, caused by being added to the U.S. blacklist List, have created a lot of uncertainties in operational continuity."

The expansion is part of its broad plan to expand capacity in China’s major city including Beijing, Shanghai, Shenzhen.  

Context:  

In March, SMIC inked an agreement with Shenzhen government to build a new wafer fabrication plant in the city that will cost USD2.35 billion.

However, SMIC said it could delay production at its new plant in Shenzhen due to US restrictions.  

Shenzhen wafer fabrication plant, a joint venture between SMIC and the Shenzhen government, may delay its equipment deliveries due to US restrictions. SMIC Shenzhen, the operator of the project.  

According to an exchange document filed by SMIC, SMIC Shenzhen, the operator of the plant, is set up55% owned by SMIC and 23% owned by Shenzhen government backed Shenzhen Major.

The 28-nm node, introduced by Taiwan Semiconductor Manufacturing Corp (TSMC) in 2011, begun mass production for smartphones three years later. In August 2015, SMIC announced it was using 28-nm technology to manufacture Snapdragon 410 processors for US chip giant Qualcomm.

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