SMIC Beijing 300mm Fab Reported to be Planning for Expansion

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SMIC Beijing 300mm Fab Reported to be Planning for Expansion

By April Peng, SEMI China

According to sources at China’s silicon foundry giant SMIC, the company is beginning to expand its first 300mm fab capacity in Beijing from 20,000 wafers per month (wpm) to 45,000 wpm. These reports indicate that, with the Chinese government supporting this plan, SMIC appears ready to announce further expansion intent in the form of plans to build a new 300mm fab with another US $4 to $5 billion capital investment. Some key semiconductor manufacturing equipment vendors, including KLA-Tencor and Applied Materials, reportedly have their executives in China gathering in Beijing to support and service their #1 key customer in China.

But as with all semiconductor manufacturing, advanced technology is not only about money. Technology, market share, and market growth are important. To help with the technology upgrade, SMIC is reported to have signed two intellectual property (IP) collaboration agreements with Synopsys and Virage Logic in low-leakage 65nm process technology area this month.

The target markets for the expanded IC output are expected to be mobile and consumer electronics, where SMIC now reports having about a 3 percent market share of 65nm foundry business in this segment today. The partnership with IP vendors will help SMIC further deliver significant advantages to its customers through industry-leading integration, power efficiency and cost efficiency.

According to SMIC’s technical staff, research and development in 40nm and 32nm processes is being done in groups in both Shanghai and Beijing. SMIC also indicated that discussions are in progress with other vendors and sources, such as IBM and IMEC, to license additional sub-50 nanometer process technology.

From recent research conducted by the SEMI China staff, it appears that four leading global foundry vendors – GLOBALFOUNDRIES, Samsung, TSMC and UMC – appear to be engaged in a new capital spending race in an effort to gain share in current and future semiconductor cycles. If SMIC does not keep up with this spending race, it might fall behind the technology leaders into the “second tier” of foundry vendors.

With recent strong demand for foundry manufacturing services, most of the fabs in China – including HHNEC, Grace Semiconductor and even the 150 mm fabs, like CSMC – are using over 90 percent of their production capacity. If SMIC’s plans achieve reality, Beijing will soon be challenging the Shanghai area fabs for IC manufacturing leadership.

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SEMI Global Update

June 1, 2010