US-China tech conflict: High Chinese language chip maker SMIC to speculate report US$5 billion in capability enlargement after income doubled in 2021

China’s greatest semiconductor foundry has put aside a report quantity for capability enlargement in 2022, after its income greater than doubled in 2021 because of sturdy demand for chips.

Semiconductor Manufacturing Worldwide Corp (SMIC) has earmarked US$5 billion for capital expenditure this yr, up from US$4.5 billion in 2021. The funding might enhance its month-to-month capability by 130,000 to 150,000 8-inch equal wafers, the corporate mentioned.

The larger funding plan got here after SMIC reported that web income in 2021 hit US$1.7 billion, greater than double the earlier yr’s US$716 million, even supposing the corporate was placed on a US commerce black checklist in December 2020.

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Main China chip firm added to US commerce watch checklist

The US determination to place the corporate on the so-called Entity Record solid a shadow over SMIC’s improvement of superior expertise nodes, however has not disrupted its operations for mature applied sciences, chief monetary officer Gao Yonggang mentioned in the course of the earnings name on Friday.

The US sanctions barred SMIC from importing probably the most superior chip making instruments, which hindered its improvement of chips beneath the 10-nanometre node – the expertise usually used within the newest smartphones – and compelled the corporate to concentrate on the extra mature 28-nm nodes used for automotive and industrial functions.

Analysts mentioned scorching demand for 5G smartphones and good autos, in addition to client electronics that has boomed amid the pandemic, helped SMIC obtain its report outcomes, regardless of the challenges posed by US sanctions.

“The corporate has made nice efforts to deal with modifications within the coverage surroundings, which elevated its manufacturing prices,” mentioned Zhou Mi, a senior researcher on the Chinese language Academy of Worldwide Commerce and Financial Cooperation below China’s Ministry of Commerce.

The corporate’s capital enlargement plans face threat this yr on condition that the US has flagged its intention to “undermine SMIC’s improvement of mature expertise,” in response to Arisa Liu, senior semiconductor analysis fellow on the Taiwan Institute of Financial Analysis.

SMIC must safe numerous gear for its 28-nm and 14-nm wafer manufacturing strains, “which might gradual the approval course of and trigger delays in gear shipments”, Liu mentioned.

Zhao Haijun, SMIC’s co-CEO, mentioned the sturdy demand would final nicely into 2022, boosting the corporate’s efficiency this yr, however he cautioned that demand within the smartphone and client electronics sectors was more likely to flatten out, whereas analogue chips for Web of Issues and good car functions would stay in brief provide.

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