Chinese chip maker HSMC closes doors after production ceased in 2019

Hongxin Semiconductor Manufacturing Co. closes its doors for good. The chip factory, located in Wuhan, China, should have started producing both 14nm and 7nm chips. The Chinese government is said to have invested many billions in the factory.

According to the Taiwan News website, HSMC has asked all employees to resign. This would appear from a message on the Chinese WeChat. The company said it has no plans to resume production. Production was halted at the end of 2019 due to a lack of funds and the failure to attract more investors. Reports would now talk about 240 people losing their jobs.

Roughly 16.5 billion euros would have been invested in the company, Technode wrote last year on the basis of statements from the local Chinese government. The company has been out of money since the summer of last year. Partly due to these financial problems, the local Chinese government took over HSMC, which in fact had to be regarded as a rescue operation. Before that, Beijing Guangliang Lantu Technology owned 90 percent of the shares.

HSMC started in 2017. The South China Morning Post reported in November last year that the chip maker’s website previously indicated plans to produce both 14nm and 7nm chips, with a volume of 30,000 wafers per month. The company should have become a very modern chip manufacturer. According to the newspaper, the first phase factory, which included a production facility and an R&D building of more than 390,000 square meters, was only partially completed and construction of the second phase had barely got off the ground.

In June last year, the then CEO of HSMC, Chiang Shang-yi, left. He previously worked at TSMC and described HSMC as a ‘nightmare’. There would also be reports of fraud, construction delays and workers with no experience in the semiconductor industry.

The Chinese investment in HSMC is in line with the Chinese government’s aim to produce its own chips as much as possible, so that the country is less dependent on foreign companies. However, that is not yet getting off the ground; like HSMC, there are more Chinese chip companies facing financial difficulties. China’s pursuit of independent chip production is partly related to US policy. That country has imposed trade bans on several Chinese companies in recent years, preventing American companies from doing business with such parties.