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Semiconductor manufacturer SMIC plans to expand its capacity
The current problem for electronics manufacturers is the shortage of semiconductors. And it has reached an international level – a number of countries are introducing measures to stimulate the industry. First of all, this concerns the construction of plants for chip production. Individual companies are also working to improve the situation, among them was the Chinese SMIC. It has allocated $8.87 billion for the construction of new facilities. The plant will be erected in Shanghai.
SMIC has a leading position in semiconductor production, but the company also feels limited capacity to increase output. Meanwhile, demand for microchips from the automotive and electronics industries continues to grow. To meet demand, the Chinese company plans to build a plant that will produce 100,000 12-inch chips per month. The enterprise will be built in the free trade zone, which is part of the Shanghai District.
The semiconductors will be produced in partnership with Lingang FTZ, whose controlling stake is owned by SMIC. In addition, the manufacturer plans to attract other investors to the project.
It should be noted that the Chinese government supports SMIC’s development and expansion. The manufacturer receives billions of dollars through the state fund, which allows the company to strengthen its market position and compete with major suppliers from the U.S., Japan or Korea.
In addition to the construction of new facilities, SMIC intends to expand production at the existing plants in Beijing and Shenzhen.
The Chinese corporation’s business deteriorated after the U.S. government blacklisted the manufacturer. Now SMIC can not use American equipment for the production of chips. As a result, the company had to suspend the production of new generation chips. However, the difficulties did not affect the financial indicators, first of all, due to the high demand for semiconductors on the world market. In addition, the volume of deliveries in the domestic market is increasing.
The Chinese corporation was founded in 2000 and listed in 2004. SMIC had problems on the American market back in the 2010s when the U.S. authorities strongly encouraged local companies to cooperate with manufacturers. The reason for such a position from Washington were the suspicions of SMIC in cooperation with the Chinese government in the defense industry. The company itself denied such statements. Then it had to leave the stock exchange in New York, officially arguing this decision by the growing costs and low trading volumes of shares.
The manufacturer has several factories in Shanghai, Beijing, Tianjin and Shenzhen, where it produces microchips of various sizes. SMIC also owns subsidiaries in other countries, such as Italy.