“28 nanometer” refers to a chip technology used commercially since 2011. It is still widely used in automotive, weapons and an explosive range of Internet of Things gadgets, Hutcheson said.
Hutchison, who has been monitoring chip production capacity for four decades, said the concern is that Semiconductor Manufacturing International Corp and other chip makers in China may use government subsidies to sell chips at lower prices. And a possible new round of financial aid from Beijing would boost chip production even further.
“The Chinese can flood the market with these technologies,” he said. “Normal companies can’t compete, because they can’t make money at those levels.”
US lawmakers pressure against SMIC
Those concerns have prompted some lawmakers to use legislation to set the defense budget back to the SMIC.
While the measure is weaker than initially proposed, this week US senators are expected to pass the annual National Defense Authorization Act 2023 that includes blocking the US government from using chips from SMIC and two other Chinese memory chip makers. It’s unclear how the ban, which goes into effect five years after it becomes law, will affect SMICs.
Founded in 2000 with backing from Beijing, SMIC has long fought its way into the ranks of the world’s leading chip makers.
But it is a giant in older technology, including the chips that control power flow in electronics. And its revenue in the third quarter of this year was close to $2 billion, nearly double the same period last year due to global chip shortages.
SMIC Filling Supply GAP
With US export controls making it impossible to produce advanced chips, SMIC is doubling down on mature technology chips and has announced four new facilities, or fabs, since 2020. , Gartner chip analyst. He noted that there has been a huge increase in new chip fabs across China.
“All of this will start to have an impact as early as 2024 and will be fully spread by 2027,” Wang said, adding that an increase in chip supply will put pressure on chip prices.
The importance of older chip technology hits the industry in the face in 2021 as shortages of those chips halt the manufacture of millions of cars and consumer electronics.
Mark Lee, chip analyst at Bernstein Research in Asia, said the company is becoming a stronger competitor to Taiwan’s UMC Microelectronics Corp and US-headquartered GlobalFoundries Inc.