'US Blacklist' SMIC Expands Semiconductor Factory with 2.6 Trillion Won Investment

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Cho Hyun-ui] China’s largest foundry company SMIC is investing $2.35 billion (approximately 2.66 trillion KRW) to expand its production facilities.

According to Bloomberg on the 18th, SMIC announced the day before that it will establish a semiconductor factory through a joint investment with the Shenzhen city government.

Through this, SMIC plans to operate a factory capable of producing 40,000 12-inch wafers per month starting in 2022.

The shareholding ratio is 55% for SMIC and 23% for Shenzhen city. An SMIC official stated, "Our company and the Shenzhen city government plan to secure the remaining capital by attracting external investments."

SMIC intends to produce semiconductors, which have faced supply shortages worldwide since COVID-19, by expanding its production facilities.

Bloomberg reported, "Amid the semiconductor supply shortage caused by COVID-19, the Chinese government is working to reduce its dependence on Western countries for semiconductors."

Meanwhile, the United States included SMIC on its blacklist last year, prohibiting the supply of parts or technology transfer to Chinese semiconductor companies. Accordingly, U.S. semiconductor companies must obtain government approval to export semiconductor technology and equipment to SMIC.

The Wall Street Journal explained, "The U.S. suspects that SMIC’s semiconductor technology could be used by the Chinese People’s Liberation Army."