SMIC expanding 28nm volume in 4Q2016, 14nm planned in 2018

[Fred Chen]

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SMIC 28nm chip shipments to double in 4Q16
Josephine Lien, Shanghai; Jessie Shen, DIGITIMES [Thursday 17 November 2016]

Semiconductor Manufacturing International (SMIC) is expected to hike shipments of its 28nm process technology to 20 million chips in the fourth quarter of 2016 from 10 million units in the third, buoyed by orders placed by Qualcomm and Leadcore Technology, according to industry sources.

Meanwhile, supply of SMIC's 40nm chips continues to fall short of demand, said the sources. SMIC's 40nm technology, considered a long-lived node, has been applied to a wide range of applications.

SMIC is also running at full capacity at its 8-inch fabs, the sources indicated. Orders placed by Qualcomm, HiSilicon and Fingerprint Cards (FPC) have already occupied 60-70% of SMIC's overall 8-inch production capacity, the sources said.

SMIC is being contracted by both Qualcomm and HiSilicon to manufacture power management chips using its 0.18-micron technology, while FPC has been the foundry's major customer engaged in the fingerprint sensor market, the sources noted.

SMIC has hiked its 2016 capex to US$2.7 billion from the US$1.6 billion allocated for 2015. The majority of SMIC's capex this year is to build additional capacity at its 8- and 12-inch fabs.

SMIC earlier in November announced construction of a new 12-inch fab at its manufacturing site in Shenzhen already kicked off with target capacity of 40,000 wafers monthly. The fab, which the company claims will be the first 12-inch fab in South China, will be engaged in the manufacture of chips made using mature process technologies with volume production scheduled for end-2017.

In October, SMIC announced an expansion project for its 8-inch fab in Tianjin, which will be capable of producing 150,000 wafers monthly compared with the current 45,000 units. SMIC also broke ground for a new 12-inch fab in Shanghai in October. The 12-inch fab is scheduled to go into volume production for 14nm chips in 2018 with monthly capacity of 70,000 wafers.

In addition, earlier in 2016 SMIC acquired a 70% stake in LFoundry for EUR49 million (US$54.5 million). LFoundry is an 8-inch foundry producing 40,000 wafers monthly with its key focus in automotive, security and industrial related applications.

 

[Daniel Nenni]

Here is the problem I see for SMIC. For the last 16 years SMIC has followed TSMC with "T-Like" processes where a GDS file from TSMC can be manufactured at SMIC. This worked okay down to 28nm but will not work with 16nm (FinFETs). UMC and SMIC are developing their own 14nm FinFET recipes and will have to develop their own ecosystem and customer base. It can certainly be done, especially in China with the backing of the government, but it is a business model change none the less.

The other thing you should notice is that SMIC's CAPEX raise from $1.6B to $2.7B is still quite small compared to TSMC's $10B. Thankfully SMIC has a different financial model than the other fabs which involves local municipalities funding the building of the fabs while SMIC operates them. It is the reverse of the standard Build-Operate-Transfer business model that you learn about in MBA school.

So where does this put UMC with their $2.2B CAPEX and traditional "pay to play" foundry business model?


D.A.N.

Login to DIGITIMES archive & research

SMIC 28nm chip shipments to double in 4Q16
Josephine Lien, Shanghai; Jessie Shen, DIGITIMES [Thursday 17 November 2016]

Semiconductor Manufacturing International (SMIC) is expected to hike shipments of its 28nm process technology to 20 million chips in the fourth quarter of 2016 from 10 million units in the third, buoyed by orders placed by Qualcomm and Leadcore Technology, according to industry sources.

Meanwhile, supply of SMIC's 40nm chips continues to fall short of demand, said the sources. SMIC's 40nm technology, considered a long-lived node, has been applied to a wide range of applications.

SMIC is also running at full capacity at its 8-inch fabs, the sources indicated. Orders placed by Qualcomm, HiSilicon and Fingerprint Cards (FPC) have already occupied 60-70% of SMIC's overall 8-inch production capacity, the sources said.

SMIC is being contracted by both Qualcomm and HiSilicon to manufacture power management chips using its 0.18-micron technology, while FPC has been the foundry's major customer engaged in the fingerprint sensor market, the sources noted.

SMIC has hiked its 2016 capex to US$2.7 billion from the US$1.6 billion allocated for 2015. The majority of SMIC's capex this year is to build additional capacity at its 8- and 12-inch fabs.

SMIC earlier in November announced construction of a new 12-inch fab at its manufacturing site in Shenzhen already kicked off with target capacity of 40,000 wafers monthly. The fab, which the company claims will be the first 12-inch fab in South China, will be engaged in the manufacture of chips made using mature process technologies with volume production scheduled for end-2017.

In October, SMIC announced an expansion project for its 8-inch fab in Tianjin, which will be capable of producing 150,000 wafers monthly compared with the current 45,000 units. SMIC also broke ground for a new 12-inch fab in Shanghai in October. The 12-inch fab is scheduled to go into volume production for 14nm chips in 2018 with monthly capacity of 70,000 wafers.

In addition, earlier in 2016 SMIC acquired a 70% stake in LFoundry for EUR49 million (US$54.5 million). LFoundry is an 8-inch foundry producing 40,000 wafers monthly with its key focus in automotive, security and industrial related applications.