On the evening of March 17, another breakthrough was made in the key equipment of my country’s chip manufacturing. SMIC issued an announcement announcing the investment and construction of a factory in Shenzhen.
According to the announcement, SMIC signed a cooperation framework agreement with the Shenzhen Municipal People’s Government, and both parties agreed that SMIC and the Shenzhen Government (through Shenzhen CIC Group) would conduct project development and operation through SMIC Shenzhen by way of proposed capital contribution.
According to the plan, SMIC Shenzhen will carry out the development and operation of the project, focusing on the production of 28nm and above integrated circuits and the provision of technical services, aiming to achieve a final production capacity of about 40,000 12-inch wafers per month, which is expected to be in 2022. Start production. After the final agreement is signed, the new investment in the project is estimated to be US$2.35 billion (about 15.275 billion yuan).
On March 18, a reporter from Shenzhen Satellite TV & One Shenzhen client came to SMIC Integrated Circuit Manufacturing (Shenzhen) Co., Ltd. to visit. The reporter observed and found that the main building of the 12-inch wafer factory is connected to the 8-inch wafer factory that has been put into production. The investment of nearly 15.3 billion yuan is mainly used for 12-inch wafer equipment and technical services.
Shenzhen state-owned assets make another big move
Cooperate with SMIC to make wafers
This time, Shenzhen State-owned Assets, which has assets of over 4 trillion yuan, made another move and joined hands with SMIC to invest 15.275 billion yuan to make wafers. According to the announcement, the actual capital contribution of all parties will be determined based on the evaluation of SMIC Shenzhen by a third-party professional company. It is expected that upon completion of the proposed investment, SMIC Shenzhen will be owned as to approximately 55% by the Company and Shenzhen Reinvestment Group, and not more than 23%, respectively, and SMIC and the Shenzhen government will jointly promote other third-party investors to complete the remaining investment. Based on this calculation, Shenzhen State-owned Assets will invest at least US$540 million in this project.
According to public information, Shenzhen Chong Investment Group was established in May 2019 and is a wholly state-owned enterprise directly managed by the Shenzhen State-owned Assets Supervision and Administration Commission. The full name of Shenzhen Chong Investment Group is “Shenzhen Major Industry Investment Group Co., Ltd.”. Its business scope includes investment in major projects in strategic emerging industries and future industries that meet the development needs of Shenzhen, and research on major industrial projects assigned by the Municipal Party Committee and Municipal Government and the Municipal State-owned Assets Supervision and Administration Commission. and investment, etc.
According to industry and commerce data, SMIC Integrated Circuit Manufacturing (Shenzhen) Co., Ltd. was established in 2008 with a registered capital of US$1.1 billion. SMIC and its holding subsidiaries are one of the world’s leading IC wafer foundries. Up to now, SMIC has established fabs in Shanghai, Beijing, Tianjin and Shenzhen.
Regarding this cooperation, SMIC said that by seizing the opportunity of the Shenzhen government to develop the integrated circuit industry, the project can meet the growing market and customer needs and promote the company’s development. SMIC Shenzhen’s investment will enable the company to expand its production scale and improve its nanotechnology services to obtain higher returns. The conclusion of the cooperation framework agreement is in the overall interests of the company and its shareholders.
SMIC set up factory in Shenzhen
Promote the further improvement of the local industrial chain
Yu Hongyu, dean of the Shenzhen-Hong Kong School of Microelectronics, Southern University of Science and Technology, said that in the past, Shenzhen IC manufacturing had certain shortcomings, specifically the small scale of the industry, the relatively backward technology, and the lack of high-quality customer resources. This time, SMIC and Shenzhen Reinvestment Group jointly built 28nm and above integrated circuit projects, which played a key role in improving Shenzhen’s related industrial chain.
Yu Hongyu said that since last year, there has been a large gap in global semiconductor production capacity, especially in automotive chips, and governments are actively responding. The implementation of this project in Shenzhen can alleviate the problem of tight production capacity to a certain extent, meet the needs of local enterprises in Shenzhen, and promote a vertical cycle of Shenzhen’s integrated circuit industry chain.
SMIC is making great strides
Chip orders lined up until 2022
Analysis believes that SMIC’s expansion of production capacity at this time may be related to the fact that the industry’s production capacity cannot keep up with the huge demand of the chip industry. According to previous reports, SMIC’s various processes are fully loaded, and some mature process orders have been scheduled until 2022. There is also news that chip giants such as Qualcomm and MediaTek have also released signals of cooperation to SMIC.
For the 28-nanometer and above integrated circuits that SMIC will focus on this time, the market is expected to receive little resistance from the United States. Some research institutes said that it is expected that the United States will gradually approve SMIC’s applications for equipment consumables above 10nm, and key equipment consumables may still be restricted by the ban, but mature process equipment and consumables above 28nm have a greater chance of obtaining export licenses.
Shenzhen state-owned assets have made frequent moves in recent years
Investment is fruitful
The eyes turn to another protagonist in this cooperation – Shenzhen State-owned Assets. In the capital market, Shenzhen state-owned assets have set off more than once.
For example, in the 2017 “Baowan Battle”, Shenzhen Metro won a 29.38% stake in Vanke A; from 2018 to 2019, Shenzhen State-owned Assets specially relieved the liquidity of listed companies; Lanxin and the public acquisition of Huawei’s glory; not long ago, Shenzhen State-owned Assets announced that it would invest in Suning Tesco with 14.8 billion…
From an industrial perspective, the investment of Shenzhen state-owned assets in recent years involves real estate, marine economy, logistics and supply chain, mobile phone industry chain, smart city construction and other fields, with transaction prices ranging from hundreds of millions to hundreds of billions. This time, Shenzhen state-owned assets aimed at chip manufacturing again and entered the integrated circuit industry generously.
In fact, the integrated circuit industry has always been one of the key industries in Shenzhen. The Shenzhen Municipal Party Committee and Municipal Government have repeatedly proposed to increase investment and research and development in integrated circuits. Yu Hongyu, Dean of the Shenzhen-Hong Kong School of Microelectronics, Southern University of Science and Technology, believes that the cooperation between Shenzhen State-owned Assets and SMIC this time is a good start for realizing the independent and controllable local IC industry chain, and it also further implements Shenzhen The strategic thinking of the municipal party committee and government.
According to public information, Shenzhen State-owned Assets has also invested in a number of other semiconductor companies, such as holding a 22.62% stake in Shenzhen Shenai Semiconductor Co., Ltd. through its subsidiary Kunpeng Investment, and participating in Nanjing Gaoguang Semiconductor Materials Co., Ltd. and Zhejiang Bolante through Shenzhen Venture Capital. Semiconductor Technology Co., Ltd., Beijing Yitang Semiconductor Technology Co., Ltd., Shendi Semiconductor (Shaoxing) Co., Ltd., Jingxin Semiconductor (Huangshi) Co., Ltd., through Shenzhen Major Industry Investment Group Co., Ltd. invested in Shenzhen Reinvested Tianke Semiconductor Co., Ltd., etc.
Regarding the investment achievements in recent years, in August last year, on the eve of the 40th anniversary of the establishment of the Shenzhen Special Economic Zone, Yu Gang, director of the Shenzhen State-owned Assets Supervision and Administration Commission, said at a special conference on the reform of Shenzhen’s state-owned assets that from 1979 to 2019, Shenzhen’s state-owned economy grew at an average annual rate of 28.7 % rate, and the total assets increased by 24,600 times. Among the 37 provincial-level state-owned assets supervision agencies in the country, the total assets of municipal enterprises ranked fourth, and the indicators such as total profit, net profit, and cost and expense profit rate all ranked second.
Yu Gang believes, “Shenzhen has embarked on a path of state-owned and state-owned enterprise reform with Shenzhen characteristics. At present, Shenzhen State-owned Assets Supervision and Administration Commission directly supervises 30 enterprises, owns 30 listed companies, and has a number of strategic shareholding companies, and none of the state-owned assets in Shenzhen has a loss. , not a single zombie company.”
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