TAIPEI (Taiwan News) — China’s largest semiconductor manufacturer announced on Friday (Sept. 3) that it intends to build an almost US$9 billion facility to produce low-end chips in a bid to compete with Taiwan Semiconductor Manufacturing Co (TSMC).
According to Nikkei, Semiconductor Manufacturing International Corp (SMIC) will invest US$8.87 billion to construct a fab in Shanghai that will focus on making 28nm chips or older process technologies. SMIC said it plans to build and operate the facility in a joint venture with the Lingang Free Trade Zone (FTZ) in Shanghai’s Pudong District, Reuters said.
SMIC’s new facility is suitable for making chips for image sensors, Wi-Fi processors, driver integrated circuits, and microcontrollers, many of which remain in tight supply amid the continuing global semiconductor crunch, per Nikkei.
The plant is expected to have a monthly production capacity of 100,000 12-inch wafers a month, according to Reuters. At this point, it is still unclear when the facility will be ready for production.
According to a stock exchange filing cited by Nikkei, SMIC will contribute US$5.5 billion in registered capital, take a 51% stake, and be responsible for the plant’s operations. The Shanghai government will acquire a 25% stake, while third-party investors will be responsible for the remainder.
TSMC announced earlier this year that it will also invest US$2.8 billion to expand capacity for its 28nm facility in the Chinese city of Nanjing to meet local demand.
The Chinese government has pumped billions into a government-linked chip fund to help domestic chip companies catch up with global rivals in Taiwan, the U.S., Japan, and Korea, according to Reuters. However, SMIC still trails the competition in these countries.
The Chinese chipmaker was also placed on the U.S. government’s Entity List, which prevents it from buying vital advanced manufacturing equipment made by American companies. This has made it difficult for it to move into the high-end chip market, one that is dominated by TSMC.