US semiconductor giant shuts China factory hailed as ‘a miracle’, in blow to Beijing’s chip plans

US chip giant GlobalFoundries confirms it has ceased operations at its only Chinese facility, with industry experts saying the poorly-planned project was doomed to fail

Closure deals blow to China’s plans to move up semiconductor value chain, amid increasingly hostile tech rivalry with the United States

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Beijing boasted that the final total investment in the GlobalFoundries plant could be US$10 billion. The plant was intended to produce 300mm wafers, a key material in making chips, but production never started at the 65,000 square metre facility, which was completed mid-2018. Photo: Weibo

Published: 5:30pm, 20 May 2020Updated: 4:32pm, 21 May 2020

US chip giant GlobalFoundries has halted operations at a joint venture factory in China, the company has confirmed, dealing a potential blow to China’s bid to own a bigger slice of the global semiconductor market.

The closure of the firm’s only China facility comes just three years after it announced plans to make chips in the mainland, and comes amid an escalating tech war with the United States.

The winding down, however, has little to do with the fierce superpower rivalry. It comes after two years of speculation as to what was actually happening at the US$100 million facility, which was hailed as “a miracle” by local media when announced to fanfare in 2017, but which never got off the ground.

Nonetheless, the symbolism is rich. China is struggling in its efforts to boost its domestic chip research and production in a bid to counter US efforts to block it from American technology.

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Last week, the US Department of Commerce upped the ante by banning the sale of Huawei-designed chips produced outside America if they are made using the US software and technology, adding further pressure to the Chinese telecom giant’s global supply chain.