On Saturday, December 19, 2020, a sign for Semiconductor Manufacturing International Corp. was seen at the company’s headquarters in Shanghai, China. (SMIC) attached. SMIC is one of the most important chip manufacturers in China.
Qilai Shen | Bloomberg | Getty Images
In December, Washington blacklisted SMIC called the Entity List, which prevents American companies from exporting technology there. The move was seen as a blow to SMIC’s ability to be on the cutting edge of chip manufacturing technology. The Chinese company is already far behind its competitors TSMC and Samsung.
The new plant in Shenzhen will help SMIC increase production of so-called 28-nanometer chips and higher. Such chips are a pretty old technology. TSMC and Samsung make 5-nanometer semiconductors, the most advanced chips used in smartphones.
Due to the recent shortage of semiconductors worldwide, some industries, such as B. automobiles, chips needed. However, such industries do not necessarily require the latest chip technology. An analyst previously told CNBC that SMIC could meet some of that demand with its older chip technology.
SMIC said the money from the Shenzhen government will enable it “to expand its production scale, advance its nanotechnology service, and get a higher return on investment.”
SMIC will acquire a 55% stake in the Shenzhen subsidiary, while the government investment arm will hold no more than 23%. The remaining capital will come from third party investors.