China's Semiconductor Manufacturing International Corp (SMIC) said on Friday it would establish a joint venture company to develop wafer production units in Beijing to bump up its semiconductor output and reduce costs.
SMIC, China's biggest chipmaker, in a stock exchange filing said it would partner with Beijing Economic-Technological Development Area Management Committee (BDAC) to develop facilities to produce 12-inch wafer, a slice of semiconductor used for the fabrication of integrated circuits.
The first phase of the project will have an estimated investment of $7.6 billion, with SMIC contributing about 51% of an initial registered capital of $5 billion.
The agreement comes as SMIC looks to build out foundries for the manufacture of computer chips that can compete with those operated by Taiwan Semiconductor Manufacturing Co Ltd, the industry's market leader.
The deal comes against a backdrop of tense Sino-U.S. relations as American restrictions on China's Huawei Technologies Co Ltd threaten Huawei's suppliers, which includes SMIC.
(Reporting by Sameer Manekar in Bengaluru; Editing by Shailesh Kuber)
