SMIC Lands $2.5 Billion in State Funds for 14nm Chip Production

The Chinese chipmaker hopes to raise the capacity at its Shanghai factory nearly sixfold.
Capitalwatch StaffMay 19,2020,06:55

China’s Semiconductor Manufacturing International Corp. (HKEX: 0981) has landed $2.5 billion in new capital to ramp up chip production.

The Shanghai-based SMIC, China’s largest chipmaker, said in a filing with the Stock Exchange of Hong Kong that it landed investments from state funds China IC Fund II and Shanghai IC Fund II of $1.5 billion and $750 million, respectively.

The funds will go to SMSC, a wafer manufacturing facility that makes 14-nanometer wafers. SMIC hopes to increase the factory’s capacity from 6,000 to 35,000 chips per month, according to the filing.

A year ago, SMIC delisted from the New York Stock Exchange amid the Sino-U.S. tech war, but it’s been seeking new capital lately. Earlier in May, the company has applied for a listing on the STAR Market in Shanghai, hoping to raise up to $2.8 billion – to boost production of its 12-inch chips.

At a time the Trump administration has picked up its war on China’s technologies (specifically, Huawei Technologies), Beijing is looking for ways to improve its domestic chip market. Last week, SMIC announced it reached a milestone by kicking off the production of the Kirin 710A for Huawei on its 14nm FinFET process.

To compare, Taiwan Semiconductor Manufacturing Co. (NYSE: TSM) this year is working on delivering the 5nm chip to the same Huawei.

The Global ASIC Chip Market size is expected to reach $24.7 billion by 2025, rising at a market growth of 8.2% CAGR during the forecast period.

On Monday in Hong Kong, SMIC shares ended 6% lower, at HK$17.94 per share.