China's state-owned Semiconductor Manufacturing International Corporation (SMIC) has been granted 2.25 billion USD from investment funds. The financial support from the Chinese government would be to counter the new sanctions imposed by the United States on the development and production of chips.
Funds controlled by the Chinese government and the city of Shanghai would be used as the capital by SMIC group company for its business operations in the city. The transaction would be completed by the end of the year, while SMIC's stake would be reduced from 50.1 percent to 38.5 percent.
The move has made when Taiwan Semiconductor Manufacturing Co. (TSMC) stopped entertaining orders from Huawei Technologies. The halt was caused by tougher US restrictions against the sale of products that used American technology to third parties without a US license. TSMC has been Huawei's leading chipmaker when the mainland company was restrained from acquiring products from American suppliers.
Last April, SMIC was under scrutiny after it has employees Huawei smartphones when the company celebrated its 20th anniversary. The units were labelled as "Powered by SMIC" showing that it has been using chipset designed by Huawei's subsidiary HiSilicon Technologies.
Huawei's original plan was to produce chips with the use of TSMC's 12-nanometer process. However, the latest US restrictions urged the company to switch to SMIC's 14-nanometer tech.
SMIC's Shanghai plant would improve its mode production by 14-nanometer to 35,000 wafer equivalents per month. Before the grant, SMIC only produced 6,000. SMIC also announced that it would invest in innovating its 12-nm process further.
Furthermore, the company also seeks to raise its 25 billion yuan value by listing on Shanghai's Science and Technology Innovation Board. The Board, otherwise known as STAR market, announced last May that it would boost its capital spending up to 4.3 billion, a 30 percent increase from its previous spending.
The Chinese government currently hold stakes of SMIC. The added funding would increase the company's monthly capacity to 448,500 units by the end of 2020, a 20 percent increase from its current production capacities.
SMIC's Richard Chang has worked with TSMC's founder Morris Chang at Texas Instruments. Last 2000, TSMC then led the first company Richard Chang launched in Taiwan. A year after, SMIC was established.
Staff members of SMIC were also revealed to be Taiwanese. TMSC once sued SMIC for allegedly violating anti-competitive asks and for stealing company secrets from the latter's former engineers.
At present, SMIC ranks as the fifth top contract chipmaker worldwide. TSMC also creates the most advanced products using 5-nanometer tech, while SMIC runs a slower version.