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Why Chartered Transferred Its 0.18-Micron Process to SMIC in 2001

In 2001, Chartered agreed to license its 0.18-micron process to SMIC for an equity stake and access to SMIC capacity. The percentage and capacity terms were not disclosed.
From TheFinanceBase Team3 min to read
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Chartered Semiconductor agreed to transfer its 0.18-micron baseline logic process technology and patent-license rights to China’s SMIC in exchange for an equity stake and access to SMIC’s manufacturing capacity. The companies did not disclose the stake’s size, the value of the deal, or the amount and duration of capacity involved. Announced on December 21, 2001, the non-exclusive alliance paired Chartered’s process expertise with SMIC’s new 8-inch fab as SMIC sought to move from 0.25-micron capability toward 0.18-micron production.

What did Chartered get for transferring its process to SMIC?

Under the alliance announced by SMIC on December 21, 2001, Chartered was to receive an equity stake in SMIC and access to SMIC manufacturing capacity. In return, SMIC was to receive Chartered’s 0.18-micron baseline logic process technology and associated patent-license rights, subject to the execution of detailed agreements.

Chartered Semiconductor SMIC
Equity stake in SMIC; percentage and valuation not stated in the December 21, 2001 announcement. Chartered’s 0.18-micron baseline logic process technology and patent-license rights.
Access to SMIC capacity; volume, duration, and other terms not stated in the announcement. Access to a proven process intended to help accelerate its technology learning curve.

The arrangement was described as non-exclusive. It was an industrial technology-and-capacity alliance linked to equity, not a disclosed cash sale or a full transfer of ownership. The available announcement does not establish the exact equity percentage, valuation, guaranteed capacity, or whether every detailed agreement was ultimately completed.

Why did the alliance matter to China’s chip industry?

In 2001, China was building domestic open foundry capacity: manufacturing services for outside chip designers rather than production only for a company’s own products. SMIC was a Shanghai-based entrant trying to establish itself as a foundry, while Chartered was an established Singaporean manufacturer. Their alliance connected SMIC with an experienced foundry’s process technology and gave Chartered a route to deepen its position in China.

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For SMIC, a licensed process from a proven manufacturer offered a way to shorten the time needed to develop manufacturing capability and make the company more credible to international design customers. For Chartered, participation in SMIC’s capacity could help it offer customers access to manufacturing in China as that market developed. These were strategic aims described around the announcement, not proof that particular customers or production volumes resulted.

What did 0.18-micron mean for SMIC’s 8-inch fab?

A micron is one-millionth of a metre: 0.18 micron is 180 nanometres, compared with 0.25 micron, or 250 nanometres. The 0.18-micron process therefore represented a move to a smaller process scale than SMIC’s initial capability. The announcement concerned a baseline logic process and its related patent rights; it did not mean the companies had disclosed every design rule, product, or manufacturing detail.

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Wafer size and process scale describe different things. An 8-inch wafer refers to the diameter of the silicon wafer being processed; 0.18 micron refers to the process technology. SMIC had entered pilot production in a new 8-inch fab with capability at 0.25 micron and below. Contemporary reporting said the company planned to move into 0.18-micron production by the end of 2002. A later EE Times report said SMIC had completed 0.18-micron engineering wafer samples in March and planned production in the new fab by year-end. These reports describe progress and plans, not independently verified commercial output.

Was Chartered’s stake a specific percentage, and did the deal guarantee capacity?

No percentage was disclosed in the announcement, and the available information does not establish the stake’s valuation. Chartered was promised access to SMIC capacity, but the capacity volume, duration, and any guaranteed allocation were not specified. It is therefore not possible to calculate the deal’s financial value or quantify how much production access Chartered received from the disclosed terms.

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How should SMIC’s 85,000-wafer figure be understood?

SMIC stated in 2001 that it targeted capacity of 85,000 8-inch wafers per month by the end of 2004. That figure was a contemporaneous production target, not a verified achieved output. It also describes a company target, not the amount of capacity guaranteed to Chartered under the alliance.

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