The move has been announced as the country’s largest chipmaker aims to capture more business which is arising from the global chip shortage in automotive and electronics industries.
Rivals including Taiwan Semiconductor Manufacturing (TSMC) and GlobalFoundries are also making huge investments to expand their capacity in chip facilities to meet the surge in demand.
SMIC has agreed to build 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.
In China, SMIC has a 200mm wafer fabrication facility (fab) and an effectively controlled joint-venture 300mm fab for advanced nodes in Shanghai; a 300mm fab and a majority-owned 300mm fab in Beijing; 200mm fabs in Tianjin and Shenzhen.
Focus on integrated circuit foundry and technology
The plan will focus on integrated circuit foundry and technology services on process nodes for 28-nanometers and above, backed by a joint venture majority-owned by SMIC.
The joint venture partner is the Lingang FTZ, and the company said it would seek other investors in the firm with registered capital of $5.5 billion.
Other companies with plants in the zone are Contemporary Amperex Technology and Tesla.
US blacklist over national security concerns
SMIC is partly backed by China’s state-affiliated chip fund.
However, SMIC is also on a U.S. government blacklist that denies it advanced manufacturing equipment from U.S.-based technology suppliers. The United States cited national security concerns, but SMIC has denied having ties to China’s military.
The measures had disrupted the company’s plans to move into high-end chip making, but its financial performance has been strong as the chip shortage has boosted demand, according to reports by Reuters.