TAIPEI (Taiwan News) — An ambitious semiconductor project in the central Chinese city of Wuhan with planned investment of about US$20 billion and a management team of former Taiwan Semiconductor Manufacturing Company (TSMC) executives has been stalled amid a failure to attract more investors.
Launched in 2017, Wuhan Hongxin Semiconductor (HSMC) was said to have poached TSMC senior engineers and managers by offering large financial incentives, as high as 2.5 times TSMC's total annual salary and bonus package. Techbang reported the Chinese company has been seeking to recruit TSMC engineers familiar with 7 nanometer (nm) process manufacturing since 2019.
However, Hongxin CEO Chiang Shang-yi (蔣尚義), TSMC's former Chief Operating Officer, was said to be contemplating quitting the project in June, but later the company dismissed those reports as rumors. The company is facing strong headwinds as it becomes more difficult to obtain advanced U.S. equipment for manufacturing chips amid US-China trade disputes.
With an acronym resembling Taiwan's TSMC, state-backed chip company HSMC hopes to compete with TSMC and Samsung. It plans to churn out up to 30,000 14-nm and 7-nm chips per month, a goal that Chinese media recently described as "unattainable."
Last year, the company hosted an event to celebrate its procurement of a ASML lithography machine for its 7-nanometer chip production line, but the untouched machine was found to have been mortgaged to a bank for a RMB$582 million (US$85 million) loan in January.
The construction of the company's two multi-floor facilities and dormitories has been suspended and the date of resumption remains unknown, according to Chinese media NBD.
Chinese reporters recently made multiple visits to the halted construction site. They found that builders and contractors have been complaining of delayed payments, so the crews had no choice but to suspend work in late 2019.
A Chinese semiconductor analyst said that HSMC might survive the crisis if China's partially state-owned Semiconductor Manufacturing International Corporation (SMIC) or companies of the same size take control and revive the stalled company.
Randy Abrams, an analyst at Credit Suisse, recently said at a forum that Chinese semiconductor companies' quest for self-reliance has a long way to go, as the barrier to making chips at home is high; that is, unless semiconductor industry capital spending can be expanded, either through joint ventures or public listings.