SMIC's Two Fabs Are Short of Capacity, and Qualcomm Hisilicon and FPC Customers Place Big Orders

According to Taiwan media reports, SMIC's 8-inch and 12 inch Fabs continue to be seriously short of production capacity. Among them, SMIC's 8-inch Fab has been contracted by key customers such as Qualcomm, Hisilicon and FPC. As for the 12 inch fab, the 40 nm process has been full for a long time, and the 28 nm process with index significance has been favored by customers such as Qualcomm and Lianxin, The shipment volume in a single quarter has reached 10 million, and it is expected to reach 20 million in the fourth quarter. Faced with the insufficient capacity of 8-inch and 12 inch plants, SMIC made a bold effort to start production expansion.

At present, the SMIC 8-inch plant has been blocked by orders from three major customers, namely 0.18 micron power management chip orders from Qualcomm and Hisilicon, and FPC orders from major customers of fingerprint identification chips in Sweden. In total, it has eaten about 60 70% of the production capacity of the SMIC 8-inch plant. In terms of 12 inch plant, SMIC's 40 nm process has been a long-selling process due to its wide application fields, while 28 nm advanced process technology. At present, SMIC has polysion and HKMG processes, and has successively received orders and mass produced and shipped.

Qiu Ciyun, CEO of SMIC, said that the shipment volume of 28nm process has reached 10 million in a single quarter, and is rapidly moving towards the goal of 20 million in a single quarter. For the application of Internet of things (IOT), SMIC proposed the concept of spocull (SMIC poly contact for ultra low leakage) and adopted special process technologies with low power consumption and low leakage, including 95nm high voltage (HV) and 95nm ultra low power consumption (ULP) And 0.13 micron low-power process, especially suitable for Internet of things related applications.SMIC's capital expenditure in 2016 was about US $2.7 billion, accounting for 92% of revenue, a significant increase compared with us $1.6 billion in 2015, mainly due to the significant expansion of 8-inch and 12 inch new plant capacity. SMIC set up a new 12 inch plant in Shanghai in October. It is expected to mass produce 14 nm process in 2018, with a monthly capacity of 70000 pieces, to meet the challenge of TSMC Nanjing plant's mass production of 16 nm process in 2018.SMIC will also expand its 8-inch plant in Tianjin from 45000 pieces per month to 150000 pieces. SMIC announced the establishment of a 12 inch new plant in Shenzhen in November, with a planned monthly capacity of 40000 pieces. It is expected to be mass produced by the end of 2017. In addition, SMIC bought about 70% equity of lfoundry in Italy. The company owns an 8-inch wafer factory with a monthly production capacity of 40000 chips. This is SMIC's first overseas outsourcing merger, mainly for the layout of the automotive electronics market.

In the future, SMIC's investment in advanced and special processes will go hand in hand and continue to invest in 8-inch and 12 inch plants to meet the capacity demand of customers. In the fourth quarter of 2016, the total capacity of SMIC in a single quarter was about 408000 pieces (about 8-inch wafers), with an annual increase of 43.66%. It is estimated that by the fourth quarter of 2017, the capacity of 8-inch plant in a single quarter will grow to 250000 pieces, and the capacity of 12-inch plant will increase to 105000 pieces, with a total annual increase of about 60%.

At present, the self-sufficiency rate of the mainland IC industry is still low. The industry estimates that the scale of the mainland IC market will be about US $118 billion by 2019. In order to avoid the excessive dependence of the mainland IC industry on imports, the mainland continues to vigorously support its own semiconductor industry, and SMIC is playing a leading role in the mainland semiconductor industry.