SMIC to build new plant in Shanghai

SMIC to build a USD 9 billion plant in Shanghai

🟩 China’s largest foundry SMIC

SMIC is the largest semiconductor foundry in China. Our customers are Chinese chipmakers and Qualcomm in the United States. Due to the recent global semiconductor shortage, it benefited from the skyrocketing prices of chip manufacturing services, generating the highest revenue in the first half of 2021.

In a stock exchange filing, SMIC reported to establish a joint venture with the Lin Jiang Special Zone Pilot Free Trade Zone in Shanghai. With a total investment of USD 8.87 billion, the purpose of the joint venture is to build and operate a semiconductor factory. The investment in the joint venture is $5.5 billion, with a 51% stake in the joint venture, and will be responsible for the operation and manufacturing of the plant. In addition, the Shanghai government will acquire 25% of the shares, and third-party investors will be required to do the rest.

🟩 To meet China’s semiconductor demand

The joint venture project is a strategic project for the development of the integrated circuit industry in the Shanghai area. The business will be developed to meet the growing Chinese market and customer needs.

U.S. Export Control List

In September 2020, SMIC was added to the U.S. Department of Commerce’s Entity List. This has prohibited the import of U.S. technology. Since SMIC is the most promising foundry in China, the joint venture was established with the government’s intention to build a self-sustaining chip industry.

SMIC cannot purchase advanced technology from U.S. equipment suppliers such as Applied Materials and Lam Research. Therefore, we are continuing to communicate with the U.S. government and looking for alternative solutions.

🟩28nm Process Semiconductor Factory

SMIC is not clear when the new plant will start production. The production capacity is 100,000 wafers per month, and chips are manufactured using process technology of 28nm and above. TSMC’s current state-of-the-art process is 5nm, so 28nm is a process several generations old. However, as a product, it is suitable for chips that are in critical supply such as image sensors, Wi-Fi chips, driver ICs, and microcontrollers.


In response to the semiconductor shortage and the improvement of production capacity in China, SMIC will build a semiconductor plant jointly with the government.

Even though the 28nm process is not state-of-the-art, it is a sufficiently advanced process for Japan. Even so, just like SMIC, there will be no talk of building a new plant in a joint venture with the government in Japan.

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