China's largest chipmaker SMIC invests $8.87 billion for a new 12-inch wafer fab in Shanghai Lingang. Its chairman Zhou Zixue announced his resignation

Editing by Greg Gao

SMIC, China's largest and most important chipmaker, was catapulted into the limelight last weekend as it announced to invest $8.87 billion to build a new 12-inch wafer foundry in Shanghai, while its chairman Zhou Zixue announced his resignation.

SMIC (Semiconductor Manufacturing International Corporation) signed a cooperation agreement with the Shanghai Lingang Management Committee to establish a joint venture company and build a 12-inch wafer fabrication plant with a production capacity of 100,000 wafers per month on September 3.

According to the announcement, the joint venture will focus on 28nm and below process foundry and technical services. The registered capital of the joint venture is $5.5 billion, of which SMIC plans to contribute no less than 51%, and the Shanghai municipal government plans to invest no more than 25%. SMIC will work with the Shanghai Lingang Management Committee to promote the completion of the remaining capital contribution by the third party. SMIC will be responsible for the operation and management of the joint venture.

As the semiconductor shortage rattled global automotive and electronics industries, SMIC pointed out that by grasping the strategic opportunity for the development of the IC industry in Shanghai Lingang free trade zone, the new plant will help meet the growing demands in China and promote the SMIC's business expanding.

On the same day, SMIC announced that Dr. Zhou Zixue resigned as the chairman of the company and the chairman of the board's nomination committee due to personal health reasons. Zhou has confirmed that he does not disagree with SMIC or the board of directors. 

The company's chief financial officer, Gao Yonggang, was appointed as the company's acting chairman, performing the duties of the chairman and serving as the chairman of the nomination committee of the board. Zhou, 64, will continue to serve as executive director.

The news surprised the semiconductor industries, and so far, there is no further report on this in China.

SMIC has several 8-inch and 12-inch wafer fabrication plants in Shanghai, Beijing, Tianjin, and Shenzhen. According to SMIC's second-quarter financial report, the company's monthly production capacity has increased from 540,800 8-inch equivalent wafers in the previous quarter to 561,500, with a capacity utilization rate of 100.4%, mainly due to the expansion of 8-inch wafer fab capacity in the second quarter.

In the second quarter of this year, SMIC's revenue hit a new high of $1.344 billion, an increase of 21.8% from the previous quarter and a year-on-year increase of 43.2%.