CapitalWatch, Sep. 2, New York
Semiconductor Manufacturing International Corp. (HKEX: 0981; STAR: 688981) just announced plans to build a new fab in Shanghai and would invest nearly $9 billion into the project. The move will ramp up production as China is in dire need of advanced microchips – and the shortage, worsened by the pandemic, is felt globally.
According to a filing with the Stock Exchange of Hong Kong, SMIC is launching a joint venture with China (Shanghai) Pilot Free Trade Zone Lin-Gang Special Area Administration to set up a factory with a monthly production capacity of 100,000 12-inch silicon wafers (28-nanometer). The JV will have a starting capital of $5.5 billion and SMIC will hold majority ownership. Other investors, including state entities, will also provide funding and own 25% in the venture, the report said.
The new plant is another among several under construction and development by SMIC. The company said they are on track despite the sanctions that Washington imposed on the chipmaker in late 2020 for alleged ties to China's military. The blacklisting of SMIC had frozen the company's purchase of certain technology, including advanced chip-making equipment.
The U.S. sanctions are not expected to impact operations at the new fab, as the 28-nm technology is not under restrictions, as reported by the South China Morning Post.
In a separate filing today, SMIC also announced its chairman, Zixue Zhou, has stepped down "with immediate effect due to personal health reasons." Zhou will continue to serve as an executive director with the company. An acting chairman was appointed in his place – Yonggang Gao, the chief financial officer, executive director, and the company secretary.
Last month, SMIC reported solid performance for the second quarter, at $1.3 billion in revenue and $405 million in gross profit. At the time, Gao said the results were better-than-expected, but the company "still faces impact brought by the Entity List, and there are still uncertainties with our expectations in indicators."
In Hong Kong trading, the stock in SMIC ended nearly flat on Friday, at HK$24.05 per share. The company is up about 12% year-to-date despite its troubles. The company is China's biggest chipmaker, and with strong government incentives in the semiconductor industry, investors anticipate to see SMIC progress to play a major role in realizing that national goal of becoming the global chip supplier.