China’s largest contract chipmaker, Semiconductor Manufacturing International Corp (SMIC), has warned that the start of mass production of semiconductors at its new $7.6 billion factory will be delayed due to difficulties in sourcing key equipment quarter or two could delay. SMIC officials publicly acknowledged for the first time the problems related to equipment procurement.
Zhao Haijun, CEO of SMIC, said Friday that delays in receiving hard-to-find equipment have slowed Beijing’s Jingcheng project. Construction of the facility began in 2021 and was originally scheduled to be completed by 2024. The businessman did not say what kind of equipment shortages are hampering the organization of mass production at the plant, but noted that the problems began after the United States tightened controls over advanced technology exports to China and forced its supporters to do the same.
The Netherlands and Japan reportedly last week reiterated their willingness to limit sales of equipment used in the production of advanced semiconductors – American restrictions went into effect in October. Zhao’s new comments contrast with those he made last year, when he was very optimistic about the prospects for projects in Shenzhen and Beijing and said special measures would be taken to solve supply problems.
The Jingcheng project is one of SMIC’s four factories under construction in China to manufacture semiconductors using the ‘mature’ 28nm process technology. It is implemented with the participation of the State Semiconductor Fund and the local government, SMIC has a 51% stake in the project. Three other plants in Tianjin, Shenzhen and Shanghai are in various stages of construction and/or production.
US authorities blacklisted SMIC in December 2020, preventing the company from buying tools and equipment from US suppliers without obtaining a special license. However, as early as 2019, the company was unable to purchase equipment for EUV lithography from Dutch ASML due to US interference. This severely limited the company’s ability to manufacture advanced semiconductors. Nevertheless, according to Canadian TechInsights, the company managed to establish production based on 7 nm process technology last year. SMIC itself did not comment on the information.
There is no public information yet on which devices will be subject to the export restrictions from the Netherlands and Japan, although ASML said they could involve advanced chip manufacturing solutions, “including but not limited to” advanced lithographic solutions. According to media reports citing Japanese politicians, Japan may introduce softer restrictions than the United States.
It was recently reported that SMIC will not cut semiconductor manufacturing investment this year and spending appears to remain at 2022 levels. On Thursday, SMIC reported a 26% year-over-year decline in revenue in the fourth quarter of last year. At the end of the full year, earnings fell about 34% year over year to $7.3 billion.