Chinese chip foundry SMIC to invest $7.5 billion in new factory in Tianjin

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SHANGHAI — Chinese chip foundry Semiconductor Manufacturing International Corp (SMIC) has announced that it has signed a framework agreement to invest $7.5 billion in a new 12-inch foundry production line in Tianjin.

The plans mark continued expansion for the Shanghai-based company, which is under US sanctions over its links to the Chinese military, which the company denies. It is a key part of China’s drive to develop its domestic chip industry.

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According to a filing late Friday, the new plant will have a production capacity of 100,000 12-inch wafers per month serving process nodes between 28 nanometers and 180 nanometers.

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The plant will be run as a subsidiary of SMIC in cooperation with the Xiqing district government in Tianjin, and will have an initial registered capital of $5 billion, according to the filing.

The company did not say when the plant would go into production.

Supported in part by government funds, SMIC is China’s top chipmaker. Although it supplies global customers primarily manufacturing edge chips, it lags behind Taiwan Semiconductor Manufacturing Co in terms of technological prowess and market share.

The company has increased capacity as Washington and Beijing compete for access and development of chip technology.

SMIC announced in late 2020 that it would build a 12-inch factory in Beijing, followed by the announcement last year of new factories in Shenzhen and Shanghai.

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The Tianjin factory will be the fourth the company has under construction in China, complementing three 8-inch and three 12-inch factories in operation in the country.

In late 2020, Washington imposed sanctions on SMIC that block access to certain manufacturing equipment, effectively preventing the company from making chips produced using 7-nanometer process nodes.

While the sanctions are aimed at preventing SMIC from producing advanced chips that meet industry standards, some analysts have found signs that SMIC has nevertheless succeeded in producing 7-nanometer chips. (Reporting by Josh Horwitz; Editing by David Goodman and William Mallard)