Chinese chip foundry SMIC to invest $7.5 billion in new fab in Tianjin

© Reuters. FILE PHOTO: A logo of Semiconductor Manufacturing International Corporation (SMIC) is seen at China International Semiconductor Expo (IC China 2020) following the coronavirus disease (COVID-19) outbreak in Shanghai, China October 14, 2020. REUTERS/Aly Son

SHANGHAI (Reuters) -Chinese chip foundry Semiconductor Manufacturing International Corp (SMIC) said it had signed a framework agreement to invest $7.5 billion for a new 12-inch foundry production line in Tianjin.

The plans mark an ongoing expansion for the Shanghai-based company, which is under U.S. sanctions related to ties to China's military, which the company denies. It is a key part of China's drive to build up its domestic chip sector.

According to a late Friday filing, the new fab will have a production capacity of 100,000 12-inch wafers per month serving process nodes between 28 nanometres and 180 nanometres.

The plant will be run as a subsidiary of SMIC in cooperation with the government of Tianjin's Xiqing district, and will have an initial registered capital of $5 billion, the filing said.

The company did not say when the plant would go into production.

Backed partially by government funds, SMIC is the leading chip manufacturer in China. While it supplies global customers primarily making trailing-edge chips, it lags behind Taiwan Semiconductor Manufacturing Co in technology prowess and market share.

The company has been expanding capacity as Washington and Beijing compete over access and development of chip technology.

SMIC said in late 2020 it would build a 12-inch fab in Beijing, followed by announcements last year of new fabs in Shenzhen and Shanghai.

The Tianjin fab will be the fourth the company has under construction in China, complementing three 8-inch fabs and three 12-inch fabs in operation in the country.

In late 2020 Washington imposed sanctions on SMIC that block access to certain manufacturing equipment, effectively barring the company from making chips produced using 7-nanometer process nodes.

While the sanctions are intended to prevent SMIC from producing advanced chips at the industry standard, some analysts have found signs that SMIC has nevertheless managed to produce 7-nanometer chips.