SHANGHAI — Shanghai-based chip maker Semiconductor Manufacturing International Corp has secured an investment worth $2.2 billion dollars from Chinese state investors, the company announced on Friday.
The funding was revealed on the same day that the United States announced new restrictions on Chinese tech company Huawei Technologies that would further impact its ability to source chips made with American technology.
According to SMIC’s announcement, a number of vehicles under China’s so-called “Big Fund,” a government-backed money pool for funding domestic chip companies, will jointly make the investment in one of SMIC’s plants.
The deal will bring its registered capital from $3.5 billion to $6.5 billion.
SMIC’s ownership stake in the plant will decrease from 50.1% to 38.5% as a result of the transaction.
The plant has a manufacturing capacity of 6,000 14-nanometer wafers per month, and SMIC says it aims to increase that to 35,000 per month.
SMIC began mass production of 14-nanometer chips late last year. In an earnings call last week, executives said orders for such products constituted 1.3% of the company’s Q1 2020 revenues.
Taiwan Semiconductor Manufacturing Co, the company’s rival, has perfected 7-nanometer production and is on its way to developing 5-nanometer production capacity.
High-end chips from Apple Inc, Huawei and Qualcomm Inc all rely on 7-nanometer and 5-nanometer process nodes for production.
The U.S. Department of Commerce said on Friday it would place fresh restrictions on American companies who sell goods or services to Huawei.
In particular, the tightened restrictions threaten to upend Huawei’s relationship with TSMC by cutting off its access to American-made manufacturing tools.
SMIC, which also relies on these tools, could also stand to be affected. The company did not respond to Reuters’ request for comment on how the restrictions would affect its business or its ties to Huawei.
(Reporting by Josh Horwitz; Editing by Kim Coghill)
