Tianjin, 27 August 2022 (TDI): Semiconductor Manufacturing International Corp (SMIC), a Chinese chip maker, announced to invest approximately $ 7.5 billion in Tianjin.
The investment will be in a new 12-inch foundry manufacturing line. It has the capacity to produce 100,000 12-inch wafers a month.
#Chinese semiconductor firm #SMIC announced on Friday a $7.5 billion deal to build a production facility in N. #China‘s Tianjin with the capacity to produce 100,000 12-inch wafers a month. #CHIPSAct #chips pic.twitter.com/lkIctXR02N
— libijian李碧建 (@libijian2) August 27, 2022
The Shanghai-based corporation, subject to US sanctions because of US connections to China’s military, is expanding continuously. It is a crucial component of China’s effort to expand its domestic semiconductor industry.
The plant will be managed as a subsidiary of SMIC in collaboration with Tianjin’s Xiqing district. Moreover, it would have an initial registered capital of $5 billion.
The Chinese company primarily manufactured trailing-edge chips for global customers. But now Taiwan SMIC exceeds its technological strength and market share.
The company has been increasing capacity as US and China compete over access and development of chip technology.
In addition to the three 8-inch fabs and three 12-inch fabs already operating in China, the company is now building the fourth fab there, in Tianjin. SMIC stated in late 2020 that it will construct a 12-inch fab in Beijing.
US imposed sanctions on SMIC in late 2020, effectively preventing the company from producing semiconductors. The US restricted Chinese access to specific production equipment that 7-nanometer process nodes.
Significance of Semiconductor Chip
Silicon chips are the new oil and an uncommon resource without which the world will stop functioning. There are billions of parts in the tiny electronic gadget, which processes, transmits, and stores data.
Chips are used in everything from cellphones, automobiles, and refrigerators to planes and military equipment.
The Covid-19 outbreak resulted in a shortage of chips on a worldwide scale. China’s severe lockdowns halted companies and damaged supply chains as well as made the situation worse.
Several regions are currently making strategies for the sector in an effort to become self-sufficient and lessen their vulnerability to Chinese manufacturing.
Moreover, the US putting sanctions on the Chinese chip maker industry to prevent its growth. The US also developing its own chip manufacturing industry to become self-sufficient.
Semiconductors’ dual-purpose applications and the importance of their role in digital infrastructure raised their strategic importance. Its importance also heightened technological competitiveness.
Owing to this, semiconductor manufacturing has become a factor in the strategic rivalry between US and China.
US CHIPS and Science Act of 2022
CHIPS and Science Act of 2022 is a bipartisan law that focuses on federal funding to promote the development of American microprocessor manufacturing facilities.
The goal is to lessen American dependence on foreign supply chains for chips. Moreover, the greater authorizations will help the country’s research and technology foundation.
The bill offers subsidies to support semiconductor production in the United States and advance scientific and technological research.
Furthermore, the US wants to far surpass China in the development and production of the most complex chips to retain its economic and military dominance. That’s why the US developed its CHIPS and Science Act of 2022.
US Deputy Secretary of Defense, Kathleen Hicks said, “Semiconductors are the ground zero of our tech competition with China.”
The urgency of SMIC’s production capacity expansion has come into focus because of increasing geopolitical tensions between US and China.
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