The inclusion into the U.S. Department of Commerce’s Entity List late final 12 months has considerably handicapped SMIC’s superior fabrication processes growth, curbing its capability to compete in opposition to bigger rivals for profitable orders. Yet, demand for older and extra mature manufacturing applied sciences remains to be on the rise, so the corporate’s manufacturing capacities function at a 95.5% utilization fee. To meet growing demand, SMIC intends to construct a one more fab.
The new fab will probably be positioned close to Shenzhen, and can course of 300-mm wafers utilizing 28 nm and bigger course of applied sciences. SMIC’s aim is to ultimately obtain manufacturing capability of round 40,000 wafer begins monthly, nonetheless the corporate doesn’t specify when this aim is projected to be attained. Meanwhile, SMIC does disclose that it expects to start out manufacturing on the new fab typically in 2022.
Since SMIC is within the U.S. Department of Commerce’s Entity List, corporations from the USA want to use for an export license, which presumably can be topic to denial. TrendForce reported earlier this month that Applied Materials, Lam Research, KLA-Tencor, and Axcelis had utilized for applicable licenses earlier this 12 months. Meanwhile, ASML, the most important producer of lithography instruments, is predicated within the Netherlands and doesn’t must get hold of a license from the U.S. authorities (although a few of its merchandise are topic to the Wassenaar Arrangement on export controls). If the licenses are granted, then SMIC will simply equip its new fab with new instruments. Alternatively, it must search them elsewhere, maybe shopping for them from smaller Chinese chipmakers that ceased to obtain assist from the Chinese authorities final 12 months.
Mature nodes account for the lion’s share of SMIC’s income. Over 95% of SMIC’s gross sales in This fall 2020 have been for wafers processed utilizing 28 nm and bigger fabrication applied sciences (see the desk under the story). While fashionable PCs and smartphones depend on SoCs made utilizing modern nodes, in addition they use all kinds of chips produced utilizing fairly older processes. Usually, such chips (e.g., energy ICs, show drivers) have a really lengthy lifecycle and are used for dozens of purposes. To that finish, it makes a terrific monetary sense for SMIC to construct a fab that can develop its 28 nm, 40/45 nm, 55/65/ nm and older nodes manufacturing capability.
SMIC mentioned that the estimated new funding for the challenge will complete $2.35 billion. Meanwhile, the corporate’s capital expenditures in 2021 will lower to $4.three billion, down from $5.7 billion in 2020 and $5.9 billion in 2019.
As normal, SMIC will construct and equip the brand new fab in partnership with native authorities, on this case the Shenzhen Municipal People’s Government and Shenzhen Major, an funding firm managed by Shenzhen Municipal. The foundry expects to personal about 55% of the fab, 23% will probably be owned by Shenzhen Municipal and its funding firm, whereas the remaining 22% will probably be owned by third-party traders.
Source: SMIC
