Taiwan Semiconductor Manufacturing Company, Limited (TSMC) is arguably the most important company in the world. The foundry produces cutting-edge
chips for top tech firms such as Apple
, Mediatek, AMD, and others. TSMC and Samsung
Foundry are currently turning out components using their 5nm process nodes (although both are facing delays for their 3nm process nodes).
Last year, the U.S. changed an export rule so that any foundry using U.S. tech to produce chips can no longer ship these components to Huawei
. The latter’s HiSilicon unit designed 5G chips for Huawei’s handsets that were manufactured by TSMC. But the new U.S. export rule is forcing Huawei to use a 4G only variant of the Snapdragon 888 on its latest flagship handset.
Huawei’s Kirin 710A is built by SMIC using the 14nm process node
China’s government and tech firms don’t want to rely on foundries in other countries, especially since the U.S. can block shipments of powerful high-end chips to Chinese manufacturers. SMIC is China’s best hope for building a self-sufficient chip industry in the country. SMIC is an important supplier for several Chinese chip designers as well as U.S. designer Qualcomm and reported record first-half earnings this year.
reports that today, SMIC announced that it will build an $8.87 billion fab in Shanghai to take on TSMC. Right now there is a chip shortage that is working its way from Automobile manufacturers to smartphone manufacturers, but it will take some time to get a new facility up and running.
The chips that will be made at SMIC’s new factory will use the 28nm process node which means that these will not be advanced chips. However, they will be useful in the production of Wi-Fi chips, image sensors, microcontrollers, and more. And SMIC will be going up against TSMC which announced this year plans to expand its 28nm production in Nanjing, China to cover local demand.