Major Chipmaking Project Suspended by Court Order
A multibillion-dollar chip-making project backed by Central China’s Hubei province has ground to a halt, as a local court has suspended the chipmaker’s right to use the land.
The local dispute is just the latest setback in China’s broader efforts to build an independent semiconductor industry capable of servicing domestic telecom giants such as Huawei Technologies Co. Ltd., after the Trump administration blacklisted the company in May to prevent U.S. firms from selling it components.
Wuhan Hongxin Semiconductor Manufacturing Co. Ltd. (HSMC), a two-year-old chipmaker based in provincial capital Wuhan, has been told (link in Chinese) by a local court that it cannot use 55 acres of land on which it has been building a factory for the next three years, effective immediately.
Construction began on the project — which HSMC’s website says will involve $20 billion of investment — in early 2018.
The lawsuit was brought by Wuhan Huanyu, an engineering firm working on the project as a subcontractor. HSMC and its general contractor for the project, Wuhan Torch Construction Group Co. Ltd., are listed as defendants. The court also froze three of Wuhan Torch’s bank accounts.
The reason for the lawsuit was not publically disclosed by either the parties or the court. Local media reported that Wuhan Torch owes money to Wuhan Huanyu, but Caixin was unable to independently confirm this.
The project had previously received strong government backing, with the Hubei government’s official website (link in Chinese) saying that it was one of the province’s biggest investment projects in 2017 and 2018 and a “provincial-level key construction project” in 2018 and 2019.
The plot in question is located in Wuhan’s urban Dongxihu district. In November 2018, HSMC paid 75.3 million yuan ($10.72 million) to use the land for 50 years.
Established in November 2017, HSMC focuses on research, development, and manufacturing of semiconductor wafers.
Contact reporter Isabelle Li (firstname.lastname@example.org)
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