China’s Semiconductor Manufacturing International Corp. (SMIC) has signed a cooperation framework agreement with the Shenzhen government to jointly invest in a $2.35 billion project, in the latest move to strengthen its chip manufacturing capabilities amid a global chip shortage.
The Shenzhen project will focus on “the production of 28 nanometer and above integrated circuits and technical services with a goal of achieving eventual production capacity of about 40,000 12-inch wafers per month,” SMIC said in an exchange filing on Wednesday. Production is expected to commence in 2022, it added.
SMIC is expected to take a 55% stake in its subsidiary SMIC Shenzhen, the intended operator of the project, while government-backed Shenzhen Major will hold a stake of no more than 23%, with other third-party investors to be invited to complete the remaining capital contribution, according to the filing.
The deal comes as Beijing tries to become self-sufficient in chip manufacturing against the backdrop of Washington tightening restrictions on some Chinese tech giants’ abilities to purchase chips made with American technology. In December last year, SMIC was placed on a U.S. trade blacklist by the then Trump administration, which alleged that the firm was providing technology to China’s military, a claim SMIC has strongly denied.
Earlier this month, SMIC extended its contract with Dutch company ASML to continue purchase of the latter’s lower-tech chipmaking machines through year-end, a straw that came after the Shanghai-based chipmaker expressed anxiety about its inability to meet customer demands amid the Covid-19 pandemic that has increased demand for electronics such as laptops and smartphones.
Contact reporter Ding Yi (firstname.lastname@example.org)