SMIC Opens Its First 12 Inch Wafer Fab In Beijing
Shanghai-based SMIC opened its 12-inch wafer manufacturing
facility in Beijing this past week. The major step puts
Semiconductor Manufacturing International Corporation
well on the way to leading-edge manufacturing capabilities
in the China market.
The current leading edge technology is for 12-inch (300
mm) wafer technology. Earlier on, the speculation was
that SMIC would only use 8-inch wafer technology. Larger
wafers allow chip foundries to make more chips per wafer,
thus allowing them to lower their prices.
The move puts additional pressure on TSMC,
SMIC's main competitor, to expand its investment in China.
TSMC has been unable its presence in mainland China because
it is partially controlled by the Taiwan government, which
has a hostile relationship with the Chinese government
in Beijing. Taiwan legislators have repeatedly acted to
prevent the transfer of the latest manufacturing technology
to China.
The president of SMIC, Richard Chang, formerly worked
at TSMC, and TSMC has sued
SMIC in California over intellectual property violations.
While initially there was concern that the lawsuit would
affect SMIC's rapid ramp-up plans, recent announcements
by SMIC indicate that they have had no
effect.
The economics of the business means that chip foundries
need the latest technology so that they can quickly recoup
their massive capital investment. The main metrics for
measurement are wafer size, nanometer size, production
utilization and yield. The smaller the nanometer size,
the more transistors can be squeezed in; currently the
smallest size is 0.13 micron; the next-generation size
is 90 nanometer process which is now being developed by
Intel. Yield is the percentage number of useful chips
which can be used from a given wafer, and is usually a
closely protected secret among the chip foundries. Yields
are lower when a new technology is introduced, but continuous
tweaking produce higher yields.
Foundries need to operate at 70% of capacity to recoup
their investment. For major customers with large orders
on a continuous basis, the foundries will offer special
deals.
Chip foundry's manufacture chips for their design client
firms. TSMC was the first firm to develop this new model
and continues to be the leader. But it is under serious
threat. Political interference in Taiwan mean that TSMC's
window of opportunity to catch a piece of the Chinese
market is closing.
Before you go, did you like this article?
If so, you can receive a free email newsletter version
each weekday. Sign up using the China Business Express
form on this page.
