Commentary: SMIC to benefit from Datang investment
Semiconductor Manufacturing International Corporation (SMIC) will take advantage of its cooperation with Datang Telecom Technology & Industry Holdings, which is backed by the China government. Market analysts in China believe that the Datang-SMIC cooperation will help SMIC not only reduce capital pressure, but also forge a closer relationship between the foundry and the China government.
As reported, Datang will acquire a 16.6% stake in SMIC. Datang's investment in SMIC will amount to US$172 million, assisting the foundry in developing 65nm and below process nodes and in the operation of its 12-inch wafer fabs, the analysts said. The investment will also help make up the cash shortfall needed to settle SMIC's debts of US$375 million, the analysts said.
Meanwhile, the Datang-SMIC cooperation also provides SMIC with an opportunity to accelerate its expansion into TD-SCDMA, China's self-developed 3G wireless standard. Participating in the government-led 3G-standard project will provide an outlet for SMIC's capacity as it moves its focus away from DRAM.
Datang owns a number of silicon intellectual property (IP) for TD-SCDMA, and it has worked with IC design houses such as MediaTek for TD-SCDMA chips. Through its ties with Datang, SMIC stands a chance of working with MediaTek, or even other foundries in Taiwan.
Industry players in Taiwan have commented that SMIC's support for China's home-grown 3G standard could better the integration of the semiconductor indusry in China. Nevertheless, pushing the TD-SCDMA standard in the international market may be a difficult task, as other 3G standards (WCDMA and CDMA2000 EV/DO) have already been widely adopted.
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As reported, Datang will acquire a 16.6% stake in SMIC. Datang's investment in SMIC will amount to US$172 million, assisting the foundry in developing 65nm and below process nodes and in the operation of its 12-inch wafer fabs, the analysts said. The investment will also help make up the cash shortfall needed to settle SMIC's debts of US$375 million, the analysts said.
Meanwhile, the Datang-SMIC cooperation also provides SMIC with an opportunity to accelerate its expansion into TD-SCDMA, China's self-developed 3G wireless standard. Participating in the government-led 3G-standard project will provide an outlet for SMIC's capacity as it moves its focus away from DRAM.
Datang owns a number of silicon intellectual property (IP) for TD-SCDMA, and it has worked with IC design houses such as MediaTek for TD-SCDMA chips. Through its ties with Datang, SMIC stands a chance of working with MediaTek, or even other foundries in Taiwan.
Industry players in Taiwan have commented that SMIC's support for China's home-grown 3G standard could better the integration of the semiconductor indusry in China. Nevertheless, pushing the TD-SCDMA standard in the international market may be a difficult task, as other 3G standards (WCDMA and CDMA2000 EV/DO) have already been widely adopted.
source
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