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Semiconductor Manufacturing International Corp. to build a $ 2.35 billion plant with funding from the Shenzhen government, the first major project to emerge from China’s master plan to catch up with the US and become more self-sufficient as global supply dwindles. chip.
SMIC warned on Thursday that the shortage could worsen this year and next and hit Chinese companies if the country does not increase domestic capacity now. The company has agreed to a joint venture with the southern municipality in which it will develop and operate a chip manufacturing plant that can produce silicon of 28 nanometers or more, it said on a stock exchange. presentation. The partners aim to attract third-party investment, start production in 2022, and eventually produce 40,000 12-inch wafers a month. Its shares rose as much as 3% in Hong Kong.
China wants to build a circle of tech giants that can stand shoulder to shoulder with Intel Corp. and Taiwan Semiconductor Manufacturing Co. While details of that effort won’t emerge for months, Prime Minister Li Keqiang has pledged to boost spending and drive cutting-edge chip research in the country’s final five-year goals, establishing a plan to compete for global influence with the US
“The shortage in chipmaking capacity is very real and the situation could deteriorate in 2021 and 2022 if Chinese companies do not accelerate expansion,” SMIC Senior Vice President Zhang Xin said at the SEMICON China conference in Shanghai. .
Beijing is moving quickly to cut dependence on the West for crucial components like chips, an issue that became more urgent after a global crisis. semiconductor shortages worsened during the pandemic. Washington has also blacklisted major Chinese tech companies, including SMIC, separating it from American technology, and at the same time severely impairing your ability to acquire the chip-making equipment you need. It’s unclear whether the Biden administration could allow US companies to resume large-scale sales to SMIC, or ease pressure from allies in Europe and elsewhere to protect the Chinese company.
Read more: How China’s Top Chipmaker Can Evade Trump’s Latest Offensive
Links with the government can be essential to achieving the country’s ambitions. Chinese chipmakers aim to advance beyond the more mature 28nm nodes, which are now used in industries ranging from car manufacturing to televisions, but need billions of dollars and years of trial and error to enter. to more sophisticated semiconductors for devices like smartphones.
Much of China’s hopes are based on advancing in burgeoning fields such as artificial intelligence and third-generation chips: made primarily of materials such as silicon carbide and gallium nitride, they can operate at high frequency and in higher-power environments and temperature, with wide applications in 5G, military grade radar and electric vehicles.
On Thursday, a key semiconductor industry official called on domestic chip giants to merge with their peers, creating national champions with the media to compete globally. In addition to SMIC, other prominent Chinese chipmakers include state-backed memory giant Tsinghua Group, which is spending billions to expand capacity, and players like From Huawei Technologies Co. HiSilicon Division and AI Specialist Cambricon Technologies Corp.
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“More industry integration is needed to improve our endurance risk. Mergers and acquisitions should be encouraged, ”Ye Tianchun, deputy director of the China Semiconductor Industry Association, told the conference.
SMIC’s Shenzhen project would mark one of the few plants in the country focused on larger 12-inch instead of 8-inch wafers, which save costs because more chips can be spliced, but are much more difficult to manufacture. SMIC already operates factories or manufacturing plants in four cities, including Beijing and Shanghai. Will own 55% of the proposed new plant, with a government-owned entity owning until a 23% stake.
“Silicon wafer is a critical raw material in semiconductor manufacturing, but it is also one of the areas in China’s semiconductor supply chain that has the lowest level of local production, especially 12-inch silicon wafers. ”, Li Wei, Executive Vice President of the National Silicon Industry Group, a state-backed wafer maker, said at the conference Wednesday.
– With the help of Debby Wu and Yuan Gao
(Updates with comments from the SMIC executive of the second paragraph)