SMIC unveils $8.87 billion capacity plan, eyes opportunities amid global shortage
Published: Sep 04, 2021 02:05 PM


China's largest chipmaker Semiconductor Manufacturing International Corp (SMIC) on Friday announced its plan to invest $8.87 billion to set up a chip plant in Shanghai, a move that experts say will help the company to embrace broad opportunities amid global chip shortage and US technology blockade. 

SMIC's unveiling of the new production line follows similar expansion plans in recent months for new plants in Shenzhen and Beijing. The investment comes amid the worst chip shortage in years. SMIC joins other major chipmakers like Taiwan Semiconductor Manufacturing Corp to meet the rising demand.

In a Friday regulatory filing, SMIC said it is teaming up with the China (Shanghai) Pilot Free Trade Zone Lingang Special Area Administration to build an $8.87 billion chip production line with monthly capacity of 100,000 units of 12-inch wafers in the Lingang Free Trade Zone in the Shanghai municipality's Pudong district.

The joint venture will have a registered capital of $5.5 billion. The remaining funds will be raised through third-party investors, according to SMIC.

SMIC's continued expansion of production capacity will help it make full use of its capital advantages, fully integrate the industrial chain, and embrace the new opportunities presented by the current global chip shortage and China's push for independence in the chip sector, experts said.

Facing crackdown from its competitors since its establishment, SMIC has grown into a mature enterprise with good performance in the capital market, but its production capacity is yet to be fully developed, Xiang Ligang, director-general of the Beijing-based Information Consumption Alliance, told the Global Times on Saturday.

In spite of the US Commerce Department's move last December to add SMIC to its Entity List, the Chinese chipmaker still witnessed a strong financial growth in 2020 with record numbers, with a 24.8 percent increase year-over-year in revenue in 2020.

The US technology blockade has instead provided opportunities for domestic chip manufacturers like SMIC as Chinese tech companies such as Huawei are choosing to cooperate with domestic chip manufacturers to hedge risks from the US suppression, Xiang noted.

Global Times