SMIC on Friday announced plans to build China's largest semiconductor production facility near Shanghai. The fab will cost $8.87 billion and will be China's largest logic fab to date with a planned production capacity of $100,000 300-mm wafer starts per month (WSPM). The facility will use mature production technologies suitable for a wide range of applications.
SMIC's new fab will be located in the Lin-Gang Pilot Free Trade Zone (FTZ) and will process 300-mm wafers using mature process technologies, such as 28 nm and thicker. Such nodes are used to make a variety of chips, including display driver ICs (DDICs), microcontrollers, network controllers, and Wi-Fi controllers. Such chips have a very long lifecycle and are in short supply these days, so the new fab will likely have enough customers when it comes online several years down the road, assuming that record demand for chips will persist.
The fab near Shanghai will cost approximately $8.87 billion. Traditionally for SMIC, the fab will be built by a joint venture company in which SMIC will control a 51% stake. Shanghai Municipal People’s Government will own than 25% and the remaining 24% will be owned by third-party investors that are yet to be found. The registered capital of the joint venture company will be $5.5 billion.
SMIC was blacklisted by the U.S. government late last year and this made it close to impossible for the company to procure the latest equipment from American companies. This not only slowed SMIC's production ramp using its FinFET-based 14 nm fabrication processes and its successors, but also hampered its ability to develop 10 nm and sub-10 nm technologies. As a result, the contract maker of semiconductors had to put emphasis on mature nodes, such as 28 nm and above, so building a fab that will use older processes is consistent with SMIC's current strategy.
Earlier this year SMIC already announced plans to build a $2.35-billion 300-mm fab near Shenzhen that will start operations sometimes in 2022. That fab will also process wafers using 28 nm and larger nodes, but its production capacity will be around 40,000 wafer starts per month when fully ramped.
SMIC's U.S. partners applied for export licenses for equipment designed for previous-generation nodes earlier this year and assuming that the U.S. Department of Commerce grants them, SMIC should have no problems equipping its new production facilities.
SMIC is not alone in expanding its capacities for mature nodes.
TSMC, the world's largest foundry, announced intentions to spend $2.8 billion on expansion of its Fab 16 in Nanjing, China. This production facility makes a variety of chips using its 28 nm and less advanced nodes and is currently fully booked due to high demand. The company plans to increase the fab's output to 40,000 wafer starts per month, or by 60%, by mid-2023. TSMC's Taiwan peer UMC is following the suite with its own expansion plans.
GlobalFoundries is in process of installing new equipment into its Fab 1 near Dresden, Germany. This facility can make chips for various applications using the company's 22FDX, 28SLP, 40/45/55NV as well as BCDLite technologies. At present, its capacity is around 500,000 wafer starts per year and the plan is to increase the output to 900,000 ~ 1 million wafer starts per year. Also, GF initiated building of a new $4.5 billion fab in Singapore as well as expansion of its Fab 8 complex in upstate New York this year.
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