China’s biggest chipmaker plans $8.87 billion fab in Shanghai

wafer production SMIC

China’s Semiconductor Manufacturing International Corp. (SMIC) will spend $8.87 billion on a new semiconductor fab, amid a global chip shortage.

The new factory is expected to be able to produce 100,000 12-inch wafers per month, “focusing on the production of integrated circuit foundry and technology services on process nodes for 28 nanometer and above,” a regulatory filing said.

Once built, it will be the largest chip fab in China.

The new fab will be a joint venture between SMIC and the China (Shanghai) Pilot Free Trade Zone Lin-Gang Special Area Administration. SMIC will own 51 percent, the Shanghai municipal government 25 percent, and the rest will go to third party investors.

The company previously announced plans to build new fabs in Beijing and Shenzhen.

SMIC is capable of developing up to 14nm process node chips, but has long struggled to catch up with market leader TSMC. That challenge has been made harder by US sanctions.

Last year, the US added the company to the Entity List, making it difficult for the company to acquire US products and services – including crucial chipmaking equipment.

While this has slowed SMIC’s technological progress, it has not dented its sales; last month the company said revenue grew more than 43 percent to $1.34 billion, and net profit jump nearly 400 percent to $687.8 million.

Along with the new fab investment announcement, SMIC revealed that its chairman was stepping down. The company said personal health reasons were behind the departure of 64-year-old Zhou Zixue, the former chief economist at the Ministry of Industry and Information Technology.

Zhou will remain executive director, while the rest of his duties will be taken over by CFO Gao Yonggang on an acting basis.