China’s SMIC To Build an $8.87 Bln Semiconductor Chip Plant in Shanghai

China's Semiconductor Manufacturing International Corp. (SMIC) recently announced that it would invest US$8.87 billion to construct a semiconductor manufacturing plant in Shanghai to expand its manufacturing capacity.

Credit: Jonas Svidras on Unsplash

SMIC, one of China's top manufacturers of semiconductors, also mentioned on 3 September 2021 that the factory they plan to build in Shanghai's Lingang Special Area will be capable of producing 100,000 12-inch semiconductor wafers a month. The company specifically mentioned that the factory, once built, will focus on integrated circuit foundry and technology services on process nodes for 28 nanometres and above.


The factory and the number of wafers produced will not only expand SMIC's manufacturing capacity for semiconductors to recover from the ongoing global semiconductor shortage, but will also be another step towards China's independence from semiconductor manufacturers in the West.


According to the company, the building of the factory is backed by a US$5.5 billion joint venture that they majorly own. The partner of this joint venture, Lingang FTZ, will also be joined by other interested investors the company would be inviting in the future.


SMIC is partly backed by China's Integrated Circuit Industry Investment Fund from 2015 to help the company develop the country's integrated circuit industry ecosystem - something that SMIC is working to accomplish. A Bloomberg article called the company "China's best hope for gaining clout in advanced chips" as it is a key production partner for many Chinese chip developers. Qualcomm, one of the consumer tech industry's giants, is also partnered with SMIC.

Former U.S. Commerce Secretary Wilbur Ross. Credit: Steven Ferdman | Getty Images

The company is also China's best bet in overcoming the many hurdles the U.S. placed to curb China's tech ambitions. You may remember that in December 2020, the Trump administration listed SMIC under a trade blacklist due to China's military-civil fusion doctrine and its subsequent national security concerns. Then-Commerce Secretary Wilbur Ross called the listing a necessary measure against China so that "advanced U.S. technology will not help build the military of an increasingly belligerent adversary".


Currently, American companies who wish to do business with SMIC will need to acquire a license to sell to the company, according to the U.S. Commerce Department's release. As a result, advanced technology nodes 10 nanometres or below will be withheld from being exported to SMIC. Despite this, however, SMIC's revenues have been steadily increasing since the first quarter of 2021.

Written by John Paul Joaquin

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