China's Semiconductor Rise... $2.2 Billion Investment in Native SMIC

[Asia Economy Beijing=Special Correspondent Park Sun-mi] SMIC, China's largest semiconductor foundry (contract manufacturing) company, is expanding its scale with a $2.2 billion injection of government funds. As Huawei's semiconductor supply faces disruptions due to repeated attacks from the United States, the Chinese government is accelerating its semiconductor ambitions.

According to Bloomberg on the 17th (local time), SMIC plans to raise more than $3 billion through stock issuance on the Shanghai Stock Exchange. A government-affiliated fund will participate in the SMIC stock issuance, investing $2.25 billion, which accounts for most of the $3 billion.

SMIC announced that after the fundraising, the company's registered capital will increase from the existing $3.5 billion to $6.5 billion. It also stated that the current production capacity of 6,000 14-nanometer chips per month could increase sixfold to about 35,000 units. SMIC also revealed plans to execute $4.3 billion in capital expenditures this year, an increase of $1.1 billion compared to the original plan.

The Chinese government's investment in SMIC was decided amid the U.S. government's moves to block semiconductor companies using U.S. technology from supplying Huawei. On the 15th, the U.S. Department of Commerce required that third-country semiconductor companies using any U.S. technology must obtain U.S. government approval before selling products to Huawei. Furthermore, with Taiwan's TSMC, which has supplied semiconductors to Huawei, deciding to establish a cutting-edge factory in the U.S., securing semiconductor supply routes for Huawei has become even more difficult.

As SMIC expands its production capacity with government funds, it is highly likely that Huawei's orders to SMIC will increase accordingly. This aligns with China's efforts to accelerate semiconductor self-sufficiency in preparation for a technological cold war with the United States.

Huawei's semiconductor design subsidiary HiSilicon has no semiconductor manufacturing plants and has entrusted most of its product manufacturing to TSMC. However, since the end of 2019, it has been shifting orders from TSMC to the domestic foundry company SMIC. Despite evaluations that SMIC's technology lags behind, choosing a domestic company over TSMC, the world's number one foundry, signifies China's strong will to achieve self-sufficiency in all semiconductor processes from design to production.

This content was produced with the assistance of AI translation services.