German memory chip giant Infineon Technologies has sealed a production deal with Semiconductor Manufacturing International Corp (SMIC).
Under the agreement, the world's third-largest dynamic random access memory (dram) chipmaker will transfer its 0.14-micron dram technology to SMIC. Infineon will also have the option of transferring its cutting-edge 0.11-micron technology to SMIC in the future.
SMIC will use Infineon's dram technology and its existing 200mm chip facility in Shanghai to produce industry-standard 256-megabit double data rate memory chips exclusively for Infineon.
The Infineon-SMIC pact is being seen as a blow to Taiwanese chipmakers, with the mainland firm securing the big contract instead of its cross-strait rivals.
China's government aims to copy Taiwan's success in the chip-making industry.
SMIC is backed by the Shanghai municipal government-controlled red-chip conglomerate Shanghai Industrial Holdings.