Major Chinese chip maker SMIC announced on August 26 that it will invest $7.5 billion to build a new plant in Tianjin, the neighboring city of Beijing, to produce 12-inch silicon wafers at a rate of 100,000 pieces per month.

The new factory will focus on mature nodes, ranging from 28nm to 180nm, widely used in fields like electric vehicles.

Why it matters: As a major contract chip maker in China, SMIC could help northern Chinese regions develop in the semiconductor industry by building a new factory in the area. The eastern city of Shanghai and its adjacent Yangtze River Delta region traditionally have a strong advantage in semiconductor supply chain and talents. 

Details: SMIC reached an agreement with Tianjin authorities to build the 12-inch wafer factory, a primary size for chipmaking. 

  • According to the agreement, SMIC will set up a new sub-firm in the development area of Tianjin, with registered assets of $5 billion. Following the agreement, the new firm will buy land for factory construction.
  • SMIC stated in an announcement on the Hong Kong exchange’s website on August 26 that the newly invested project caters to the firm’s development plan and will benefit the firm in the long term. The firm also said all funding for the new plant comes from SMIC or was raised by the firm, and that the investment won’t have a notable impact on SMIC’s financial condition or hurt shareholder benefits.
  • SMIC has not revealed when the new factory will start production, according to Nikkei Asia.
  • For the plant, the company worked with Tianjin’s Xiqing Economic-Technological Development Management Committee and a state-owned developing firm in Tianjin — Tianjin Xiqing Economic Development Group. These local partners will also support SMIC in talents, land, infrastructure, and others.

Context: SMIC has three 12-inch wafer factories under construction in Shanghai, Beijing, and Shenzhen. The company also has four 12-inch fabrication facilities under construction in Tianjin, Shanghai, Beijing, and Shenzhen, according to the firm’s website.

  • Beijing’s factory is estimated to begin operation in 2024, while the Shenzhen factory will be completed by the end of this year, according to SCMP.
  • According to its financial report, the utilization rate of the firm’s production volume was 97.1% in the second quarter of this year. The figure fell slightly due to the building of new factories that count towards capacity but need time to contribute to production, according to Zhao Haijun, CEO of the firm.

Ward Zhou is a tech reporter based in Shanghai. He covers stories about industry of digital content, hardware, and anything geek. Reach him via ward.zhou[a] or Twitter @zhounanyu.