(Image courtesy of Semiconductor Manufacturing International Corporation).

Joint Venture Targets Chips for China's Growing Industry

Aug. 3, 2015
SMIC, China's largest foundry, is learning how to make an extremely advanced generation of chips. Three companies, including Qualcomm, are mentoring it.

Semiconductor Manufacturing International Corporation, the largest chip foundry in China, has signed an agreement with several international companies to support China’s native semiconductor industry. Huawei, imec, and Qualcomm have formed a joint venture with the foundry to develop an advanced generation of chips.

The joint venture will produce 14-nanometer chips. This technology is widely used in microprocessors for smartphones, computers, and servers - and it has been in development outside of China as early as 2012. The joint venture is an opportunity for SMIC to catch up with other manufacturers like Intel and Samsung.

The joint venture, SMIC Advanced Technology Research and Development Corporation, reflects a recent wave of collaboration between foreign chip makers and China’s semiconductor industry, which lags far behind other parts of the world. China depends heavily on foreign companies for computer chips.

In 2014, China imported over $231 billion in chips, according to China’s Ministry of Industry and Information Technology. In recent years, the Chinese government has been trying to wean itself off semiconductor imports, brokering research with foreign chip makers and making large investments in domestic suppliers.

SMIC plans to have 14nm technology in full production by 2020. It shares that goal with China’s National IC Industry Development Outline, which hopes to transform China into the world’s leading chip maker by 2030. The Chinese government has allocated over $170 billion in funds to advance the country’s chip industry, according to estimates from research firm McKinsey.

SMIC will be the majority owner of the venture, with each partner company serving as minority shareholder. The chips will be fabricated on production lines owned by SMIC, which will have licensing rights for the technology. Additional financial terms of the agreement were not released.

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