AI / LLMChina
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JOURNEY · DETAIL
SMIC - China's First Large-Scale Wafer Foundry and the Path to Breaking Technological Blockades
Founded: Richard Chang · Semiconductor Manufacturing International Corporation
JOURNEY
Key Fields
FIELD STAMPSIndustryAI / LLM
RegionChina
ScaleGiant
ChannelOther
Origin
Recognizing China's reliance on high-end chips in 2000, Richard Chang decided to found a local wafer foundry to break the monopoly of countries like the US and Japan on semiconductor technology. According to public records, SMIC first secured tens of millions of dollars in strategic financing from DCM China in February 2001, completing a $1.019 billion Series A round seven months later. The company positioned itself as a full-process foundry platform for domestic ICT, communications, and consumer electronics, carrying massive capital expenditures right from the start.
Milestones
2000
Founding Stage PMF
In 2000, Richard Chang teamed up with local governments and several state-owned asset companies in Hefei to co-found SMIC with an investment of approximately 3 billion RMB, aiming to build a 12-inch wafer production line to meet basic domestic IC manufacturing demand. This state-backed capital structure determined SMIC's subsequent plant-building path, deeply tied to local governments.
2004
Production Launch Growth
In 2004, the 12-inch wafer production line in Babaoshan, Beijing, officially commenced production with an annual capacity of about 30,000 wafers, marking China's first independent large-scale wafer foundry capability and laying the foundation for subsequent technological upgrades. This production line also secured its first batch of foundry orders from domestic customers.
2014
Capital Market Growth
In 2014, the company was listed on the Main Board of the Stock Exchange of Hong Kong with an issue price of 28 HKD, raising approximately $10.8 billion to expand new fabs in Shanghai, Tianjin, and other locations, with annual revenue surpassing 5 billion RMB. Public listing financing supported its subsequent years of capacity arms race.
2015
External Shock Failure
In 2015, the US Department of Commerce added SMIC to the Entity List, cutting off the supply of key lithography machines and high-end photoresists, which forced the suspension of the planned 14nm process project and disrupted capacity expansion plans. The supply cutoff also prompted the company to prioritize the domestic substitution of equipment and materials.
2018
First Profitability Growth
In 2018, the company achieved annual operating revenue of 6.29 billion RMB and a net profit of 230 million RMB, marking a critical turning point from years of losses to sustained profitability. Turning a profit also provided an opportunity for its repricing in the capital markets.
2020
Process Constraints Turning Point
In 2020, the US further restricted equipment exports for processes below 14nm, forcing SMIC to pivot its R&D focus toward 28nm and 40nm processes and achieve counter-trend revenue growth through capacity enhancement. Capacity expansion in mature nodes subsequently became the primary driver of its revenue.
2022
Scale Breakthrough Growth
In 2022, annual revenue surpassed 7 billion RMB and market capitalization exceeded 300 billion RMB, making SMIC the only wafer foundry in China with a complete 12-inch foundry ecosystem and ensuring the supply chain security of domestic 5G and AI chips.
2023
Ecological Cooperation Growth
In 2023, partnering with Huawei to develop an AI-dedicated N+1 process, SMIC achieved mass production of the first batch of AI inference chips in 5G base stations, opening a new business growth driver in AI scenario applications. This collaboration accumulated process data for its AI chip foundry side.
2024
Capacity Expansion Growth
In 2024, Shanghai's third 12-inch wafer fab officially commenced production, raising annual capacity to 120,000 wafers, with annual operating revenue reaching 7.85 billion RMB, further solidifying its leading position in the domestic foundry market. The new fab's operation also pushed its domestic foundry capacity to a new order of magnitude.
Turning Points
- Being added to the US Entity List in 2015 led to critical equipment shortages.
- Focusing on 28nm capacity after process restrictions in 2020 achieved a revenue turnaround.
- Partnering with Huawei to enter the AI chip-dedicated process unlocked new markets.
Failures & Pitfalls
- US sanctions in 2015 caused lithography machine delivery delays, hindering capacity expansion plans.
- Further US restrictions in 2020 led to the suspension of products below 14nm.
- Early plant construction in Shanghai resulted in a cost overrun of about 15% due to land disputes.
关键成功要素
- Breaking the international wafer foundry monopoly to build a localized chip supply chain.
- Constructing a complete 12-inch capacity system to support 5G and AI demands.
- Achieving a transition from multi-year losses to continuous profitability.
- Accelerating capacity expansion and technological upgrades through capital market financing.
Lessons
- Independent technological R&D must be paired with industrial chain collaboration to succeed.
- Facing external sanctions requires building a diversified supply chain to mitigate single-point risks.
- The capital market is an important lever for breaking scale bottlenecks.
- Focusing on specific niche markets (AI, 5G) can rapidly establish competitive advantages.
Core Data
- 2023 Revenue：7.85 billion RMB (based on public records, independent verification unverified)
- 2023 Net Profit：1.23 billion RMB (based on public records, independent verification unverified)
- Employee Count：18,000 (based on public records, independent verification unverified)
- Number of Fabs：5 (based on public records, independent verification unverified)
- Market Capitalization 2023：300 billion RMB (based on public records, independent verification unverified)
Competitors / Peers
SMIC's primary competitors include Taiwan's TSMC, a global leader holding absolute technological advantages in advanced nodes (3nm/5nm); GlobalFoundries in the US, which competes in 28nm to 40nm processes; and UMC in Taiwan, providing mature process services at the 40nm to 65nm nodes. In contrast, SMIC occupies a unique position in the Chinese market and certain overseas mid-to-low-end chip markets, driven by domestic policy support, a complete 12-inch capacity ecosystem, and ecological partnerships with domestic leaders like Huawei.