Entering 14nm! SMIC once again purchases semiconductor equipment from Japan and the United States for $1.1 billion

Following the announcement on February 19 that it would purchase $600 million worth of equipment from Lam Research, SMIC recently announced a large order worth $1.1 billion (approximately RMB 7.7 billion) - it will purchase equipment from Applied Materials of the United States and Tokyo Electron of Japan.

The announcement shows that SMIC has entered into a commercial terms agreement with Applied Materials Group and issued purchase orders pursuant to the agreement, which concern the company's purchase of Applied Materials products for the production of wafers; and issued Tokyo Electron purchase orders, which concern the company's purchase of Tokyo Electron products for the production of wafers.

Among them, the Applied Materials purchase orders were issued from February 11, 2020 to February 28, 2020, and the content was about Applied Materials Group supplying the company with machines used to produce wafers.

The pricing for the Applied Materials products purchased under the Applied Materials Purchase Order was determined on an arm's length basis. The total consideration for the Applied Materials Purchase Order is US$543 million.

Tokyo Electron's purchase orders were issued between March 26, 2019 and February 28, 2020, and were related to Tokyo Electron Group supplying the company with machines used to produce wafers.

The pricing for the purchase of Tokyo Electron products under the Tokyo Electron Purchase Order was determined on an arm's length basis. The total consideration for the Tokyo Electron Purchase Order is US$551 million.

SMIC said that the company is China's most advanced and largest integrated circuit manufacturer. In order to meet customer needs, the company continues to expand its production capacity, seize market opportunities and grow.

Whether it is the previous $600 million or the current $1.1 billion, judging from SMIC's statement, the purpose of their continued purchase of equipment is to "continue to expand production capacity." Currently, SMIC's urgent production capacity, in addition to the 8-inch process, is advanced processes such as 14nm.

According to Liang Mengsong, co-CEO of SMIC, the monthly production capacity of 14nm (including the improved 12nm process) will reach 4K in March this year, 9K in July, and 15K in December.

SMIC's 14nm production capacity will not increase further after 15K wafers/month, and there are also newer processes.

In addition to the 14nm and improved 12nm processes, SMIC's N+1 and N+2 generation processes will also begin trial production at the end of this year, which is equivalent to TSMC's 7nm low-power and 7nm high-performance process levels. They will also be the focus of capacity construction in the next one or two years.