Zombie Fabs Plague China's Chipmaking Ambitions, Failures Burning Tens of Billions of Dollars
Arthur T Knackerbracket has processed the following story:
China's aggressive push to develop a domestic semiconductor industry has largely been successful. The country now has fairly advanced fabs that can produce logic chips using 7nm-class process technologies as well as world-class 3D NAND and DRAM memory devices. However, there are numerous high-profile failures due to missed investments, technical shortcomings, and unsustainable business plans. This has resulted in numerous empty fab shells - zombie fabs - around the country, according to DigiTimes.
As of early 2024, China had 44 wafer semiconductor production facilities, including 25 300-mm fabs, five 200-mm wafers, four 150-mm wafers, and seven inactive ones, according to TrendForce. At the time, 32 additional semiconductor fabrication plans were being constructed in the country as part of the Made in China 2025 initiative, including 24 300-mm fabs and nine 200-mm fabs. Companies like SMIC, HuaHong, Nexchip, CXMT, and Silan planned to start production at 10 new fabs, including nine 300-mm fabs and one 200-mm facility by the end of 2024.
However, while China continues to lead in terms of new fabs coming online, the country also leads in terms of fab shells that never got equipped or put to work, thus becoming zombie fabs. Over the past several years, around a dozen high-profile fab projects, which cost investors between $50 billion and $100 billion, went bust.
Many Chinese semiconductor fab projects failed due to a lack of technical expertise amid overambitious goals: some startups aimed at advanced nodes like 14nm and 7nm without having experienced R&D teams or access to necessary wafer fab equipment. These efforts were often heavily reliant on provincial government funding, with little oversight or industry knowledge, which lead to collapse when finances dried up or scandals emerged. Some fab ventures were plagued by fraud or mismanagement, with executives vanishing or being arrested, sometimes with local officials involved.
To add to problems, U.S. export restrictions since 2019 blocked access of Chinese entities to critical chipmaking equipment required to make chips at 10nm-class nodes and below, effectively halting progress on advanced fabs. In addition, worsening U.S.-China tensions and global market shifts further undercut the viability of many of these projects.
[...] Leading chipmakers, such as Intel, TSMC, Samsung, or SMIC have spent decades developing their production technologies and gain experience in chips on their leading-edge nodes. But Chinese chipmakers Wuhan Hongxin Semiconductor Manufacturing Co. (HSMC) and Quanxin Integrated Circuit Manufacturing (QXIC) attempted to take a shortcut and jump straight to 14nm and, eventually, to 7nm-class nodes by hiring executives and hundreds of engineers from TSMC in 2017 - 2019.
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