SMIC plans $5 bn Capex to expand existing fabs and roll out three new

Chip maker Semiconductor Manufacturing International Corp (SMIC) reported 39 percent increase in 2021 sales to $5.4 billion on the back of a global chip shortage.
SMIC at a trade event
“The shortage of chips and strong demand for local and indigenous manufacturing brought our company a rare opportunity,” Guo Guangli, the secretary of the board, said on an earnings call.

Profit from operations for the year reached $1.4 billion, a roughly four-fold increase from 2020.

SMIC, which makes computer chips to the designs of other companies, has a small share of the chip fabrication sector, which is dominated by Taiwan Semiconductor Manufacturing Co (TSMC), Reuters reported.

SMIC it is the largest and most advanced fab in China, thanks in part to backing from the government.

Sales surged in 2021 after a global chip shortage that began in late 2020, driving up prices and bringing a jump in orders.

SMIC, headquartered in the commercial hub of Shanghai, earlier said it would build three new fabs in Beijing, the capital, as well as in southern Shenzhen, and its home city, at a cost of several billion dollars each.

SMIC is expected to open the Shanghai fab in early 2022 and its Beijing and Shenzhen fabs by year’s end, Guo said.

SMIC said the Capex is expected to be about $5.0 billion in order to expand the existing fabs and roll out of the three new projects. SMIC said the incremental production capacity in 2022 is expected to be higher than last year.

The company is pushing ahead with expansion despite U.S. sanctions that have shaken plans to move into high-end chip manufacturing.

Dutch lithography machine maker ASML Holding said it is yet to receive permission to ship to SMIC extreme ultraviolet (EUV) lithography machines needed to make the most advanced chips.

Recently, SMIC’s vice chairman Chiang Shang-yi, SMIC’s chairman Zhou Zixue and three board members resigned from their positions.