Chinese contract chipmaker Semiconductor Manufacturing International Corp. (SMIC) has unveiled plans to establish a joint venture to develop a new wafer plant in Beijing, as the company tries to increase semiconductor output and reduce costs.

SMIC and Beijing Economic-Technological Development Area Management Committee will jointly build the facility to make 12-inch wafers, a component in semiconductors used in the manufacture of integrated circuits, according to a filing published on the Shanghai Stock Exchange’s website on Saturday.

The plant aims to produce 100,000 12-inch wafers per month in the initial phase, the filing said, adding that it will make adjustments to its capacity in the second phase based on market demand.

First-phase investment in the project is set to be $7.6 billion, with SMIC contributing about 51% of an initial registered capital of $5 billion, according to the filing.

Some industry experts said that the new plant could help SMIC enhance its production capacity at a time when the Shanghai-based company is striving to close the technological gap with rivals such as Taiwan Semiconductor Manufacturing Co. Ltd. (TSMC)

Last month, Hong Kong-listed SMIC made a secondary listing on Shanghai’s Nasdaq-style high-tech STAR Market. The company said that it would use the proceeds from the stock sale to develop 12-inch chips, bankroll the research and development of advanced technologies and supplement working capital.

Contact reporter Ding Yi (yiding@caixin.com)

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