On Friday, China’s Semiconductor Manufacturing International Corp said, it will invest $8.87 billion to build a chip plant in Shanghai. The development underscores Beijing’s efforts to boost its independence in the chip manufacturing sector.
The development comes at a time when global chipmakers are struggling to fulfill orders from the electronics and automotive industries triggering new capacity expansion plans from chip giants such as GlobalFoundries and Taiwan Semiconductor Manufacturing Corp Ltd.
In a statement SMIC said, it plans on building a production line with monthly capacity of 100,000 12-inch wafers in the Lingang Free Trade Zone (FTZ) in the Pudong district of China’s business hub.
Its plan focuses on integrated circuit foundry and technology services on process nodes for 28-nanometers and above, and is backed by a joint venture majority-owned by SMIC.
Its joint venture partner is Lingang FTZ; SMIC said it is also looking for other investors in the firm which has a registered capital of $5.5 billion.
Other companies with plants in the zone are Tesla and Contemporary Amperex Technology Co Ltd.
SMIC is partly backed by China’s state-affiliated chip fund.
SMIC continues to be on the US Entity List, a trade blacklist that denies it advanced manufacturing equipment from U.S. suppliers.
Washington has cited national security concerns and has denied SMIC access to its technologies saying it has ties to the Chinese military.
While the US measures has disrupted the company’s plans to move into high-end chip manufacturing sector, its financial performance however has been strong following an increase in demand from the global chip crunch.