China’s SMIC To Invest US$8.87 Billion Into New Chip Plant

Semiconductor Manufacturing International Corporation (SMIC), the Chinese chipmaker that came into the spotlight at the height of the US sanctions imposed by the former Trump administration, is set to open up a new foundry. The new plant will be based in Shanghai and is expected to compete with other chipmakers, such as TSMC and Samsung.

To that end, SMIC says that it is prepared to invest upwards of US$8.87 billion (~RM36.77 billion) into the facility’s construction and has even signed an agreement with a government-back entity for the city of Shanghai. Specifically, the area in which the plant is expected to be built will be located within the Lingang Special Area of China Pilot Free Trade Zone.

Once the plant is ready, SMIC says that it plans to have the foundry ready to fabricate and churn out as many as 100000 wafers per month. As for the nature and size of the chips, reports say that the plant will be using 28nm production technology and older, rather than more modern and thinner wafers. For that matter, these larger chips are used in the production of image sensors, Wi-Fi chips, and microcontrollers, among other components that are currently in short supply globally.

The chip sector and its manufacturing process have been a flashpoint between the US and China, ever since the former began imposing sanctions on Chinese companies back in 2019. As many of you will remember, Huawei was the first casualty in the ongoing trade war between the two economic powerhouses. Then, back in September last year, the US instituted a ban on SMIC, citing national security concerns and reports that the chipmaker was involved with the Chinese military.

It also doesn’t help that the US is currently trying to block Wise Road Capital, a China-based private equity group, from purchasing the Korean Magnachip Semiconductor Corp for the sum of US$1.4 billion (~RM5.8 billion). Unsurprisingly, the US says that such an acquisition by the firm poses a risk to the “national security of the United States”.

China’s E-Hailing Giant DiDi Files For IPO; Valuation Could Double That Of Grab

China’s largest e-hailing company, Didi Chuxing, has filed to be publicly listed in the US through an IPO (initial public offering) that could be the biggest this year. Indeed, the firm could end up with a valuation that is more than double that of Grab – the Southeast Asian giant that we’re all more familiar with.

Sources previously told Reuters that the IPO could aim for a valuation close to US$100 billion (~RM410.8 billion). And according to a Bloomberg report in April, the company was looking into a valuation of as much as US$70 billion (~RM287.6 billion) to US$100 billion. That would easily beat Alibaba’s US$25 billion (~RM102.7 billion) IPO in 2014 – the largest achieved by a Chinese company listing in the US.

As a comparison, Grab is going public in a SPAC deal worth US$39.6 billion (RM 163.7 billion) – the largest of its kind on record. For more information on what SPACs and IPOs are, you can refer to this piece. Of course, it’s worth mentioning that Didi has a substantially larger pool of potential customers (China, etc.) than Grab (Southeast Asia).

According to Reuters, Didi CEO Cheng Wei said last year that the company wants to have 800 million monthly active users worldwide and complete 100 million orders a day by 2022 – this includes e-hailing, bike and food delivery orders.

Grab, on the other hand, often touts the total population of Southeast Asia (currently 650 million) as its potential customers. As you can see, the difference is pretty staggering.