Chipmaker SMIC to benefit most from China's new semiconductor policy

Semiconductor Manufacturing International Corp (SMIC), the mainland's biggest contract chipmaker, could become the prime beneficiary of a new government policy that aims to accelerate the industry's development.

In a much-anticipated move last week, the State Council introduced the "Guidelines to Promote National IC Industry Development", which sets out central government targets and long-term support for domestic designers, developers and manufacturers of integrated circuits.

This high-level framework proposes the setting up of a National Industry Investment Fund, managed by professional investors and used to inject an unspecified amount of capital into the mainland's semiconductor industry. The financing will be used to expand manufacturing capacity, boost research and development, and push for market restructuring and consolidation.

"Although no company is singled out, we believe the announcement is positive for SMIC and Chinese [semiconductor] companies in general," Mark Li, a senior analyst at Bernstein Research, said in a report.

Li expects Shanghai-based SMIC to receive "a sizeable part" of the government-backed stimulus, which would help lower the company's capital expenditure and asset depreciation. "We believe it would be a primary beneficiary," he said.

SMIC in February named Gao Yonggang, a veteran of big state-owned enterprises, as its new chief financial officer. He replaced Gareth Kung, who now serves as executive vice-president of finance.