Can SMIC lead China's semiconductor self-reliance dream?

Find the Latest SoC Solutions
for... Automotive... IoT... Security... Audio... Video

China is struggling to achieve its aim of becoming independent in semiconductor manufacturing as the US-China trade war is adversely affecting this industry.

www.orfonline.org, Oct. 04, 2021 – 

In an exchange filing on September 3, China's largest contract chipmaker Semiconductor Manufacturing International Corp. (SMIC) announced that it had signed an agreement with the Lin-Gang Special area–part of Shanghai's free trade zone–to establish a new factory. The proposed US $8.87 bn worth foundry has a planned monthly production capacity of 100,000 12-inch wafers. SMIC will control at least 51 percent of the joint venture, and an investment entity designated by the Shanghai government will take a 25 percent stake. In March, SMIC announced that it would work with the Shenzhen government to invest in a US $2.35 billion project to produce 28nanometre (nm) and above integrated circuits to produce 40,000 12-inch wafers per month.

The COVID-19-induced global semiconductor chip crunch is not the only impetus behind the state-backed chip manufacturer's aggressive expansion. The primary reason lies in the tense Sino-US geopolitical turf battle. Many Chinese tech companies, including national Champion Huawei, have become victims of the Sino-US trade war since 2018.

In September 2020, the US placed restrictions on exports to SMIC. In a letter dated September 25, the US Commerce Department directed that US firms must apply for a license to export certain products to SMIC, as per a Bloomberg report. The new export restrictions came when SMIC's work was already taking a beating following Trump's restrictions on Huawei, barring Huawei from buying semiconductors anywhere in the world, including from SMIC. As per a Credit Suisse report, Huawei's chip unit was estimated to be around one-fifth of SMIC's sales in 2020. In December, SMIC received the final blow. The Trump administration put SMIC and its ten subsidiaries on the Entity List of the US Commerce Department, i.e., the US's trade blacklist, alleging that the company was providing technology to China's military, a claim SMIC has denied.

click here to read more...

 Back