SMIC: China’s top chipmaker obtains government funding for its $2.35 billion factory in Shenzhen

SMIC, or the Semiconductor Manufacturing International Corporation in China, revealed its plans to build a new plant in Shenzhen. The project will cost $2.35 billion, and it was reported that the government is willing to provide funds for it.

The joint funding for the project

CNBC reported that SMIC and the government of Shenzhen would jointly fund the building of the company’s factory. The said Chinese territory is known to be China’s technology hub, and it is home to several big tech firms, including Huawei and Tencent.

As there is a massive chip shortage worldwide today, the company is said to be the key to Beijing’s plans to bolster self-sufficiency in the semiconductor business amid tensions with the U.S.

The strain exposed the country’s reliance on foreign technology, so the factory is being seen as the answer to be self-sufficient in the years to come. It should also be noted that SMIC is actually China’s largest chipmaker; thus, it is getting support from the administration.

Expectations from SMIC’s Shenzhen plant and funding details

Once completed, the new factory is expected to help SMIC to increase its production capacity and become sufficient with the so-called 28 nanometers and above chips. These are said to be an old technology since South Korea’s Samsung and Taiwan’s TSMC are producing 5-nanometer semiconductors, which are the most advanced chips to date. These are mostly installed on smartphones.

Additionally, as per the South China Morning Post, the SMIC in Shenzhen is aiming to manufacture 40,000 pieces of 12-inch wafers every month. The semiconductor company is targeting 2022 as the starting date for the production in the factory to commence.

For the funding arrangements, it was reported that in the $2.35 billion investment for the facility, SMIC will be paying 55% while the Shenzhen government will give 23%. The remaining capital will be coming from third-party investors.

“By seizing the opportunity in Shenzhen to develop the integrated circuit industry, the project can meet growing market and customer needs and promote our development,” SMIC said in a statement.

Meanwhile, despite being blacklisted and sanctioned by the U.S., SMIC was still able to report record-high results of $3.91 billion for the full year of 2020 due to the high demand for chips.