The expansion by China's largest chipmaker comes as the
shortage rattled the automotive and electronics industries, spurring new
capacity plans by firms like Taiwan Semiconductor Manufacturing Corp Ltd and
GlobalFoundries.
SMIC said it agreed to build a production line with monthly
capacity of 100,000 12-inch wafers in the Lingang Free Trade Zone (FTZ) in the
Pudong district of China's business hub.
The plan will focus on integrated circuit foundry and
technology services on process nodes for 28-nanometers and above, backed by a
joint venture majority-owned by SMIC.
The joint venture partner is the Lingang FTZ, and the
company said it would seek other investors in the firm with registered capital
of $5.5 billion.
Other companies with plants in the zone are Contemporary
Amperex Technology Co Ltd and Tesla.
SMIC is partly backed by China's state-affiliated chip fund.
In the last decade, the government has poured billions from
the fund into helping domestic chip companies catch up with global rivals in
the Japan, Korea and the United Staets, though SMIC lags counterparts there.
SMIC's unveiling of the new fab follows similar expansion plans in recent
months for new plants in Shenzhen and Beijing.
The firm is also on a U.S. government blacklist that denies
it advanced manufacturing equipment from U.S. suppliers. The United States
cited national security concerns and SMIC has denied having ties to China's
military.
The measures disrupted the company's plans to move into
high-end chip making, but its financial performance has been strong as the chip
shortage has boosted demand.