Chinese semiconductor maker to make advanced computer chips

  • Business
  • Friday, 08 Oct 2004

SHANGHAI, China (AP) - Semiconductor Manufacturing International Corp., a leading Chinese computer chip maker, plans to begin supplying chips using 90-nanometer technology to major clients such as Texas Instruments Inc. beginning next year, the companies said Friday. 

The plan marks a breakthrough in China's acquisition of advanced technology. Beijing has long sought to nurture domestic semiconductor makers and reduce the country's once total dependence on imported chips for its own electronics industry. 

SMIC said Friday it was in trial operations for 90-nanometer processing technology, a label that describes the average size of the minuscule chip features.  

The company said it expects to offer chips using that technology beginning in the first half of 2005. 

SMIC spokeswoman Nini Chien refused comment, however, on an announcement by Texas Instruments that it expects to receive chip samples - a first step in qualifying for future orders - from the Shanghai-based company by March of next year. 

"We signed a foundry service contract with SMIC around the middle of this year,'' Desmond Wong, Texas Instruments (China) Co.'s director, said Thursday in Hong Kong. 

Texas Instruments has been using SMIC for late-stage processing of 130-nanometer chips since 2002.  

SMIC's adoption of the 90-nanometer technology would put it on a par with the latest industry standard. 

A chip's transistor components and the spaces between them are measured in microns. The more closely transistors can be packed together, the more powerful the chip.  

The smaller the production technology, the higher the profit margins. 

Integrated device manufacturers like Texas Instruments run their own chip factories, but also design, assemble and market products produced by other makers.  

Service contracts with foundries call for the suppliers to provide samples to be approved before orders will be made. 

Daiwa Institute of Research analyst Pranab Kumar Sarmah said the advance means that SMIC, the fourth largest foundry in the world but No. 1 in China, is about nine to 12 months behind other leading contract chip makers such as Taiwan Semiconductor Manufacturing Co. in terms of the 90-nanometer technology. 

"This shows that SMIC is narrowing the gap in advanced technology,'' he told Dow Jones Newswires. 

SMIC trailed TSMC by about 18 months in 130-nanometer technology, Sarmah noted. 

SMIC, whose shares are traded in Hong Kong and New York, opened its first chip plant in Shanghai in 2001. 

Late last month it opened China's first advanced, 12-inch computer memory chip factory in Beijing. 

The factory, built with help from Infineon Technologies AG of Germany and Japan's Elpida Memory Inc., brought expensive, cutting edge technology to China for the first time. 

In the past, China was unable to acquire such technology due to concerns over its potential military applications. 

SMIC has said it assured governments in Europe, the United States and Japan that it would never use its equipment to produce defense-related products. 

All the equipment used in the new Beijing plant was licensed to prevent conflicts over such issues, it said. - AP

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