China’s Semiconductor Manufacturing International Corp is to invest $8.87 billion in a new chip plant in Shanghai as Beijing bids to boost its independence in the critical global sector.
The expansion, announced on Friday, by China’s largest chipmaker comes as shortages continue to rattle the automotive and electronics industries, forcing firms like Taiwan Semiconductor Manufacturing Corp and GlobalFoundries to come up with new capacity plans.
SMIC – partly backed by China’s state-affiliated chip fund – said it has agreed to build a production line with a monthly capacity of 100,000 12-inch wafers in the Lingang Free Trade Zone (FTZ) in China’s Pudong business hub.
The joint venture partner is the Lingang FTZ, and the company said it would seek other investors in the firm with registered capital of $5.5 billion.
Other companies with plants in the zone include Contemporary Amperex Technology and Tesla.
In the last decade, the Chinese government has poured billions from its chip fund into helping domestic companies catch up with global rivals in the Japan, Korea and the United States.
SMIC’s announcement follows similar expansion plans in recent months for new plants in Shenzhen and Beijing.
The firm is on a US government blacklist that denies it advanced manufacturing equipment from US suppliers. The United States cited national security concerns but SMIC has denied having ties to China’s military.
The blacklisting has disrupted the company’s plans to move into high-end chip making but its financial performance has been strong as the chip shortage has boosted demand.
- Reuters and Sean O’Meara