Chinese chip maker SMIC to build $9bn factory in Shanghai

At present, Chinese industry can meet only 20% of domestic demand for silicon chips (Dreamstime)

Semiconductor Manufacturing International (SMIC), China’s largest chip maker, announcedtoday that it is planning to collaborate on an $8.9bn chip factory in Shanghai, Chinese news site Shine reports.

SMIC will build the plant in the Lingang Free Trade Zone, and will form a joint venture with the Lingang FTZ Administration.

The aim is to produce 100,000 wafers a month, an output that would make it the largest chip factory in China. The wafers will be based on older generation 28 nanometre technology and will meet the growing shortages of this type of integrated circuits in consumer electronics and the automotive industry.

At present, Chinese factories can only meet 20% of demand for this kind of chip, according to the Ministry of Industry and Information Technology.

SMIC said in a statement that it was “seizing the strategic opportunity to develop the integrated circuit industry in Lingang Special Area. The plant will meet growing market and customer needs and promote business development”.

Taiwan Semiconductor Manufacturing (TSMC), the world leader in chip production, has developed the ability to make 5 nanometre integrated circuits, which are used in Apple phones and laptops.

TSMC said earlier this year that it will spend $2.8bn to expand its production capacity of 28 nanometre chips in Nanjing.

According to the statement, SMIC and Lingang FTZ will invest $5.5bn in the plant, giving it a controlling 51% stake. The Shanghai government will take a 25% stake and third-party investors will be sought for the remainder.

No date was given for the beginning of construction work on the factory.

Image: At present, Chinese industry can meet only 20% of domestic demand for silicon chips (Dreamstime)

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