SMIC to stop managing Chengdu wafer fab

LONDON, UK: Shanghai-based foundry Semiconductor Manufacturing International Corp. is going to terminate an agreement to manage a 200-mm wafer fab in Chengdu.

SMIC has been in talks with Dallas-based Texas Instruments Inc. to take over the operations of the government-owned fab. 

This is an unusual situation as, according to a 2005 agreement, SMIC does not own the wafer fab. The fab, named Cension Semiconductor Manufacturing Corp, was only to be managed by SMIC and funded by investors. 

SMIC claims that the Chengdu situation is part of its plans to make profit again after it suffered a net loss of $482 million of earnings of $333.1 million in Q4 in 2009. 

Along with its own plants in Shanghai and Beijing, the company also set up many fabs and managed them in regions which local Chinese authorities sought to increase development in, with semiconductor manufacturing. SMIC began constructing a 300-mm wafer fab in the Wuhab Hubei Province in 2006.

The local authorities would pay for this facility which would be under SMIC management and would be the first fab in Central China. In 2008, he company agreed to build and manage 200 and 300-mm fabs to be owned by the Shenzen municipal government.

This particular model of SMIC management was brought about by the founder ad CEO of the company, who resigned in November 2009, due to an unfavourable legal settlement over a dispute with Taiwan Semiconductor Manufacturing Co. He was replaced by industry veteran David N.K. Wang.