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China’s top chipmaker to build a $2.35 billion plant with government funding

A Semiconductor Construct International Corp. (SMIC) signage atop the company’s headquarters in Shanghai, China, on Saturday, Dec. 19, 2020. SMIC is one of China’s most foremost chipmakers.

Qilai Shen | Bloomberg | Getty Images

In December, Washington put SMIC on a blacklist called the Entity Catalogue raisonn which restricts American companies from exporting technology to it. The move was seen as a blow to SMIC’s ability to discern up to the most cutting-edge chipmaking technology. The Chinese firm is already far behind its rivals TSMC and Samsung.

The new Shenzhen apparatus will help SMIC ramp up production of so-called 28 nanometer and above chips. Such chips are positively old technology. TSMC and Samsung are manufacturing 5 nanometer semiconductors, the most cutting-edge chips which are used in smartphones.

But a fresh shortage of semiconductors globally has left some industries, such as automobiles, needing chips. But such industries don’t unavoidably need the latest chip technology. One analyst previously told CNBC that SMIC could fulfil some of this when requested with its older chip technology.

SMIC said the money from the Shenzhen government will allow it to “up its production scale, advance its nanotechnology service and thus achieve a higher return.”

SMIC will take a 55% pike in the Shenzhen subsidiary while the government’s investment arm will have no more than a 23% position. The remaining primary will come from third-party investors.

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