The Wuhan East Lake Hi-Tech Development Zone Administrative Committee and Semiconductor Manufacturing International Corporation ("SMIC," NYSE: SMI, SEHK: 0981.HK) today signed a cooperation framework agreement in Wuhan's East Lake Hotel in which both parties agreed to cooperate and jointly invest in the 12-inch wafer production facilities of Wuhan Xinxin Semiconductor Manufacturing Corporation (Wuhan Xinxin) through cash injection.
The official signing ceremony was attended by the President of the Chinese Academy of Engineering Zhou Ji; officials from the National Development and Reform Commission, China Development Bank, and Hubei Province; Wuhan City Party Secretary Yang Song; Wuhan Mayor Ruan Chengfa; SMIC Chairman Jiang Shangzhou; SMIC President and C.E.O. David N.K. Wang; and others.
SMIC began its cooperation with Wuhan City in early 2006 when its government funded and constructed Wuhan Xinxin and engaged SMIC to manage it. Wuhan Xinxin commenced production in September 2008, with its fab construction and operations meeting global industry standards. The signing of this new agreement strengthens the commitment between SMIC's new management team and the Wuhan government to move towards greater expansion and development.
The cooperation framework agreement proposes a possible joint venture driven by corporate responsibility and profitability, which will focus on 65-40 nanometer integrated circuits with a goal of achieving a production capacity of 45,000 wafers per month within three years of its establishment. Capacity planning for this new phase will be consistent with industry standards for profitable development, with products and technology driven by market demand.
This cooperation will benefit both parties and serve as a strategic component in SMIC's expansion plan over the next five years. It also will become a key contributor to the Chinese and global semiconductor industries, as a reliable platform for high-end chip manufacturing.
Through this agreement, SMIC and Wuhan City will collaborate extensively in areas such as talent development, chip design, and supply chain improvement, to promote the economic development of Wuhan's "Optics Valley" and upgrade Hubei Province's information & technology industry. As East Lake High-tech Zone is developing its strategy to build the "National Innovation Model Area" and "China Optical Valley," this cooperation will become an innovation engine to drive their development.