SMIC extends ASML deal till end of year
Print Edition
SEMICONDUCTOR Manufacturing International Corp has extended a deal until the end of this year with ASML Holding NV to pay US$1.2 billion for equipment purchases, which will ensure the Chinese mainland’s biggest chipmaker’s production capacity.
The Netherland-based ASML is the world’s largest supplier of the photolithography devices, which are needed by wafer plants to make chips.
In a filing to the stock exchanges, SMIC disclosed it had entered into a volume purchase agreement with ASML Shanghai on February 1, a one-year extension to the original term that was valid until December 31 last year. The deal includes a US$1.2 billion purchase for ASML machines used in producing wafers, the company said.
The deal means SMIC is capable of making chips with “mature technology” of up to 14-nanometer processing which can be used in automobiles, computers and some smartphones.
Devices with advanced processing technology such as 7-nanometer are still facing a US tech ban. In December, SMIC was one of dozens of firms put on a US blacklist that required American semiconductor manufacturing equipment firms such as Applied Materials Inc and Lam Research Corp to obtain a license before exporting products to the chipmaker.
ASML produces a critical tool required to manufacture advanced chips: an extreme ultraviolet lithography, or EUV, machine.
ASML said the volume purchase deal with SMIC related to an older technology called deep ultraviolet lithography, or DUV.
The deal helps SMIC solve a potential capacity problem and is expected to relieve a chip shortage in the domestic market, analysts said.
SMIC shares gained in the Shanghai and Hong Kong. STAR-listed SMIC rose 1.09 percent to close at 59.31 yuan (US$9.26), compared with a 2.09 percent decrease of the STAR 50 Index.
SMIC said it would continue to work with global supply chain partners to make sure it can continue to manufacture products, but its capacity expansion plan remains uncertain in the long term.
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