China’s top chip maker, Semiconductor Manufacturing International Corp., announced a partnership with the Shanghai government to establish a $8.87 billion chip production line in the city, advancing China’s semiconductor self-sufficiency ambitions in the midst of a global chip scarcity.
The chip production facility will be created through a joint venture with the Shanghai government’s Lin-Gang Free Trade Zone Administration, according to a regulatory filing on Friday. When complete, it will specialize on mature 28-nanometer and higher process node technologies and produce 100,000 12-inch wafers each month, according to SMIC.
The combined venture will have a $5.5 billion registered capital. SMIC stated that the remaining money will be raised through third-party investors.
The investment comes amid the largest semiconductor scarcity in years, which has slowed production at major vehicle manufacturers around the world and raised consumer electronics prices.
As the industry struggles to satisfy increased demand, SMIC has joined other big chip producers in announcing expansion ambitions. Taiwan Semiconductor Manufacturing Co. announced a $100 billion investment to boost production capacity over the next three years.
Samsung Electronics Co., based in South Korea, aims to invest $116 billion by 2030, while GlobalFoundries Inc., based in the United States, has announced that it will double its capital investment this year to increase capacity. Intel has also committed $20 billion to improving its chip manufacturing capabilities and is considering acquiring GlobalFoundries.
In recent years, China has attempted to enhance local chip manufacture as a result of US export restrictions that have harmed Chinese enterprises such as SMIC and Huawei Technologies Co. SMIC stated in an earnings call earlier this year that it wasn’t able to fully capitalize on this year’s surge in chip demand due to constraints that prohibited it from accessing certain U.S. technologies and suppliers.
The Chinese government’s emphasis has resulted in a flurry of public and private investment in Chinese semiconductor businesses. China’s high-profile, well-funded projects, on the other hand, haven’t always worked out.
Tsinghua Unigroup Co., a key player in China’s goal for semiconductor self-sufficiency, defaulted on a bond last year and said in July that one of its creditors had filed for bankruptcy.
Mainland According to a survey by Boston Consulting Group and the Semiconductor Industry Association, China is the world’s second-largest producer of mature nodes chips of 28 nanometers and higher, after only Taiwan.
Because of a shortage of chips needed for air-bag functionality, braking control, and other functions, the auto industry, which uses mature-technology semiconductors, has had to reduce production. Both General Motors and Ford Motor Company said this week that production at two and three factories, respectively, would be reduced further.
Separately, SMIC announced that Chairman Zhou Zixue had stepped down owing to health concerns. Gao Yonggang, the company’s chief financial officer, will serve as acting chairman, according to the statement.