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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
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
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.
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.
The GlobalFoundries factory, in a hi-tech park in the southwestern city of Chengdu, was one of China’s major foreign-invested semiconductor projects, for which the local government rolled out the red carpet three years ago.
At the time, Chengdu boasted that the final total investment in the 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.
A spokesperson for California-based GlobalFoundries confirmed that the Chengdu plant had stopped operations and that it had offered staff an “employee optimisation plan”, a commonly-used euphemism for lay-offs.
“The plan is being carried out on the basis of open and transparent communications with the employees and they have been offered various options to choose from based on their personal situations,” a company statement read.
A 2018 annual report from the joint venture, in which GlobalFoundries had a stake of 51 per cent with the rest controlled by an investment vehicle of the Chengdu government, showed that the plant had 320 employees.
A company notice sent to employees dated May 14 and seen by the Post said that after mid-June, the company would only pay 70 per cent of Chengdu’s minimum monthly wage, about 1,246 yuan (US$175.38), while negotiating severance packages with staff.
For some industry analysts who have followed the Chengdu project from its inception, its demise has less to do with the trade war, more to do with poor planning.
There was little detailed research and planning before the project was launched. As far as the Chengdu government is concerned, it lacks a sufficient understanding of GlobalFoundriesGu Wenjun, analyst
“There was little detailed research and planning before the project was launched. As far as the Chengdu government is concerned, it lacks a sufficient understanding of GlobalFoundries, its decision-making mechanism and economic strengths, and it did not get strong support from the central government,” said Gu Wenjun, chief analyst at Shanghai-based semiconductor research firm ICwise.
The idea of establishing a joint venture was first pitched to Chongqing municipality, a neighbouring city of Chengdu, in 2016. Chongqing signed a memorandum of understanding with GlobalFoundries to set up a plant to manufacture 300mm silicon wafers – components for making integrated circuits – using technology from GlobalFoundries’ Singapore factory.
After the deal to open a Chongqing plant fell through for unclear reasons, Chengdu moved in to cut a deal with GlobalFoundries in late-2016. A 2017 blueprint stated that 3,500 employees could be working at the site, according to Wallace Pai, then GlobalFoundries’ general manager for China.
But production never started. Initially the project was supposed to have two phases: using mainstream technologies to manufacture 300mm wafers from 2018, then transferring to more advanced technologies in late-2019.
However, in October 2018, the two partners decided to “bypass” the phase one manufacturing stage, partly because of China’s increasing demand for more advanced products and GlobalFoundries’ own financial stress. The project has since stalled.
Comparing official announcements from the Chengdu government and GlobalFroundries back in 2017, Gu from ICwise said the two had different focuses, which might explain the plant’s derailment. The government clearly wanted to bring in mainstream, lower-risk technologies to boost the city’s brand, while the company aimed for Chinese capital and government support to invest in more advanced technology, Gu said.
The joint venture will continue after the factory’s demise, with GlobalFoundries still expecting to expand sales in the Chinese market, the company said in its statement. It now has five factories, three in the US and one each in Singapore and Germany.
When The Post contacted the office of the joint venture partner within the Chengdu government, the person answering the phone said they did not know anything about the closure nor future plans, before hanging up without giving their name.
“Our focus in China is on developing and growing our partner ecosystem including creating local technology infrastructure and bringing more intellectual property vendors and electronic design automation partners to better serve the local market,” the company said.
According to the China Semiconductor Industry Association, China’s integrated circuits sales rose 15.8 per cent in 2019 from a year earlier to 756.2 billion yuan (US$106.44 billion), while sales in the global semiconductor market dropped by 12 per cent to US$412 billion.
Last week, Dutch company ASML Holding, a key supplier of chip-making equipment, set up a plant in Wuxi, in Jiangsu province, in a boost to China’s efforts to attract foreign semiconductor investment.
The statement, issued on 27 April but only reported this week, singles out stadiums, exhibition centres, museums and theatres as public facilities where it’s especially important to ban plagiarism.
“City constructions are the combination of a city’s external image and internal spirit, revealing a city’s culture,” the government statement says.
It calls for a “new era” of architecture to “strengthen cultural confidence, show the city’s features, exhibit the contemporary spirit, and display the Chinese characteristics”.
Image copyright STR / AFP / GETTYImage caption – Not the Arc de Triomphe, but a college gate in Wuhan
The guidelines on “foreign” architecture were mostly welcomed on Chinese social media.
“The ban is great,” wrote a Weibo user, according to state media the Global Times. “It’s much better to protect our historical architectures than build fake copycat ones.”
Another recalled seeing an imitation White House in Jiangsu province. “It burned my eyes,” she said.
Image copyright OLIVIER CHOUCHANA / GETTYImage caption Thames Town, an English-themed town near Shanghai, pictured in 2008
In 2013, the BBC visited “Thames Town”, an imitation English town in Songjiang in Shanghai.
The town features cobbled streets, a medieval meeting hall – even a statue of Winston Churchill – and was a popular spot for wedding photos.
“Usually if you want to see foreign buildings, you have to go abroad,” said one person. “But if we import them to China, people can save money while experiencing foreign-style architecture.”
Image copyright WANG ZHAO / GETTYImage caption – Raffles City, Chongqing, in 2019 – mimicking the Marina Bay Sands hotel in Singapore
China, of course, is not the only country to borrow – or copy – other countries’ designs.
Las Vegas in the US revels in its imitations of iconic foreign architecture including the Eiffel Tower and Venetian canals.
Thailand also has developments that mimic the Italian countryside and charming English villages, mainly aimed at domestic tourists.
Photo taken on April 14, 2020 shows containers at the Lianyungang Port in Lianyungang City, east China’s Jiangsu Province. China’s foreign trade showed signs of stabilizing in March with export and import both beating bearish market expectations, official data showed Tuesday. (Photo by Geng Yuhe/Xinhua)
SHENYANG, April 5 (Xinhua) — Huo Chunlei, who runs a hotpot restaurant in Shenyang, capital of northeast China’s Liaoning Province, said he did not lay off any of his staff, although the restaurant is having difficulties for reopening after two months of closure in China’s nationwide measures of coronavirus control.
A few weeks after Chinese provincial-regions with low risk of the novel coronavirus gradually resumed work and production, shops and eateries have reopened, and roads become bustling again, as hundreds of millions of people confined at home for weeks in compliance with epidemic prevention rules get back to a normal life.
Huo’s restaurant has been in operation for a week. Only half of the tables are filled at dinnertime. The revenue is barely enough to cover the expenses of the house rent and employee wages, he said.
However, he said his business is able to survive because of the government’s bailout policies. For example, the approval of deferred payment of social insurance premiums for his employees alone can save him 80,000 yuan (about 11,250 U.S. dollars) a month.
“The staff are willing to stay, as we are all confident in tiding over the difficulties together,” he said.
The local governments at all levels have rolled out a slew of measures to shore up the catering business, including cutting taxes, reducing house rent as well as water and electricity fees.
The governments in Liaoning, Shandong, Jiangsu and Zhejiang provinces have issued coupons with a value ranging from 10 million yuan to 100 million yuan to encourage people to spend on dining out.
Before the production resumption, there were some consumer councils’ surveys showing that consumers had suppressed consumption desire for dining out and shopping as well as going to movie theaters, gymnasiums and tourist spots after the epidemic crisis ends.
“The so-called retaliatory consumption has not yet appeared in the catering industry, as people are still wary about the infection risk, but there will be a gradual recovery growth,” said Chen Heng, executive director of Hainan Hotel and Catering Industry Association in the southernmost Chinese province of Hainan.
“Before reopening, we increased the distances between tables, but with reduced tables, there are still many empty tables at dinner time. My restaurant used to have all seats full and even queues,” said Huo.
Like Huo, Lin Lunheng, founder of the Fuzhou Super Dinner Co. Ltd. in southeast China’s Fujian Province, is also worried about business.
“Although the chain stores have reopened, revenues have decreased by 70 percent compared with that before the epidemic. This is a big blow to restaurants,” said Lin.
The Italian style chain restaurant has offered e-coupons to draw customers.
As the spring weather is getting more and more pleasant, consumers’ desire for dining out and travel is growing. According to a survey report jointly released by the China Travel Academy and Trip.com Group on March 19, Chinese are longing for tours across the country, with Yunnan, Hainan and Shanghai among the top destinations.
NANJING, March 19 (Xinhua) — Chinese cities are encouraging residents to dine out and shop with measures such as handing out e-vouchers to boost consumption sectors hit hard by the novel coronavirus outbreak.
Like many living in the eastern city of Nanjing, Wang Linlin was waked up by her alarm clock at midnight and with a few clicks on her cellphone, she was ready to meet her luck of the draw: getting a meal voucher worth 100 yuan (about 14.2 U.S. dollars).
“I’ve always been thinking about hanging out and having hotpot with my friends after the epidemic, so getting a voucher would be great,” Wang said.
Nanjing has been giving out vouchers worth 318 million yuan to its residents since Sunday. People are invited to participate in lotteries for e-vouchers which can be used in restaurants, gymnasiums, bookshops as well as tourist spots, helping the service sector bounce back.
The voucher bonus has been well received as more than 1.6 million local citizens have registered for the lotteries as of Monday, according to the Nanjing Big Data Administration Bureau.
Besides Nanjing, many other regions have also been taking similar actions.
Macao gives out vouchers totaling 2.2 billion patacas (about 275 million U.S. dollars) to its residents. The city of Ningbo in east China’s Zhejiang Province is issuing consumption vouchers worth 100 million yuan while the city of Jinan, east China’s Shandong Province, is handing out vouchers worth 20 million yuan to stimulate spending on tourism and culture.
Due to the coronavirus outbreak, Chinese customers have shied away from restaurants and shopping malls. China’s retail sales of consumer goods, a major indicator of consumption growth, declined 20.5 percent year on year in the first two months of this year, according to the National Bureau of Statistics.
“People are more willing to dine out with the vouchers, which can boost confidence in the catering sector and finally get the economy back on track,” said Shen Jiahua, chairman of a chain restaurant company in Nanjing.
After the coronavirus outbreak ends, people are eager to spend generously. According to a survey conducted by the Jiangsu consumers council, nearly 90 percent of the respondents expressed suppressed consumption desire.
Restaurants, shopping malls, movie theaters, gymnasiums and tourist spots are the top five destinations for consumers to unleash their spending spree after normal life resumes, the survey showed.
Local officials across China have been taking the lead in recent days in patronizing restaurants and shopping malls, hoping to use their appearances in public to persuade more residents to go outside.
In provinces such as Jiangsu, Anhui, and Jiangxi, government notices have urged officials to dine out and go shopping to help related businesses through the epidemic period.
“Government officials are using their actions to convey confidence and support work resumption and consumer spending,” commented a Chinese netizen.
SHANGHAI/HONG KONG (Reuters) – China’s President Xi Jinping is enlisting the state-dominated financial sector in a war against a virus outbreak that has killed more than 500, mobilising lenders, brokerages and fund managers to pump resources into stricken parts of the economy.
Answering Beijing’s call, banks are rushing to offer virus-fighting loans at ultra-low rates, investment banks are helping companies issue anti-virus bonds faster, and managers of mutual funds are refraining from selling stocks, to damp market panic.
Concerted efforts to rein in the virus that emerged late last year in the central city of Wuhan highlight the centralized power the ruling Communist Party wields in a sector dominated by state-owned companies.
But the campaign, which has stirred memories of government rescue efforts during a market crash in 2015, deepens concern over corporate governance in China and risks sowing seeds of future trouble.
Wuhan DDMC Culture & Sports Co (600136.SS), a leisure company in the city, won Shanghai Stock Exchange approval to issue bonds of up to 600 million yuan (66.32 million pounds) via a “green channel” created for virus-hit companies, it said on Thursday.
“It’s like receiving charcoal on a snowy day,” the company, whose operations were wrecked by the epidemic, said on its website.
Three other companies – Zhuhai Huafa Group, Sichuan Kelun Pharmaceutical and China Nanshan Development Group – have raised a combined 2.1 billion yuan ($301 million) this week by issuing bonds via the interbank market, to fund virus-battling efforts.
Proceeds from the debt issuance, which won quicker-than-usual approval from regulators, will fund drug discovery programmes and hospital construction, the companies said.
Regulators have also asked banks to inject cheap funds into virus-stricken areas, and not to withdraw loans from companies suffering the impact. Sectors such as tourism, transport and leisure are the worst-hit.
Bank of Suzhou, in the eastern province of Jiangsu, vowed to cut financing costs for hundreds of small corporate clients and bolster lending.
For companies such as food producers, logistics firms and makers of anti-virus drugs, it will cut the rate on loans by 10 basis points below the lending benchmark, to stand as low as 3.98%.
A loan officer at Bank of China promised special treatment for those defaulting because of virus fallout, saying the central bank would cap interest on loans to firms with operations critical to beating the virus, such as makers of masks and drugs.
He added, “Such companies will enjoy the lowest possible rates.”
But the orchestrated support also triggered concerns of moral hazard among some.
“I’m afraid many companies about to go bankrupt will come and say their businesses are affected by the virus outbreak,” said a bond fund manager, who declined to be named.
A flurry of government support has helped stabilise stocks in China’s equity market after a plunge on Monday.
Regulators have told major mutual fund companies and insurers not to cut net equity positions this week, and urged brokerages to limit short-selling activities by clients, said sources who sought anonymity.
Fund managers were also nudged to do their bit. China’s fund association, which is supervised by the securities regulator, said employees at 26 mutual fund houses had put their own money – or more than 2 billion yuan ($287 million) – into fund products since Monday.
NANJING, Nov. 25 (Xinhua) — China’s rocket-carrying ships Yuanwang-21 and Yuanwang-22 wrapped up their mission of transporting the Long March-5 Y3 rocket and arrived at a port in eastern China’s Jiangsu Province Monday.
The two rocket-carrying ships departed from northern China’s Tianjin Port on Oct. 22 and arrived at Qinglan Port in Wenchang in southern China’s Hainan Province after a five-day journey.
The two rocket-carrying ships are China’s first ships made exclusively to carry rockets. With a length of 130 meters, a width of 19 meters and a height of 37 meters, the ships have a displacement of 9,000 tonnes. Each ship is equipped with two 120-tonne cranes that can hoist large rockets.
Each ship has traveled around 4,900 nautical miles, and new hoisting methods have been adopted to improve efficiency, according to Shi Zhe, head of the ships.
Rear Admiral Ma Weiming is seen as pioneer of electromagnetic aircraft launch system
Experts say Ma’s full membership of Central Committee shows how important sea power is to China’s strategic planning
An artist’s impression of China’s third aircraft carrier, the Type 002, which will incorporate an electromagnetic aircraft launch system developed by Rear Admiral Ma Weiming and his team. source: Photo: Handout
China’s Communist Party has elevated the senior naval engineer behind the development of a hi-tech launch system for the country’s next aircraft carriers, showing China’s ambition to increase its naval power.
Rear Admiral Ma Weiming, who is seen as the pioneer of China’s electromagnetic aircraft launch system (EMALS), was named as a full member, from alternate member, of the party’s Central Committee at the party plenary meeting which ended on Thursday.
The plenum sessions – attended by more than 300 full and alternate members of the Central Committee – provide an opportunity for the party’s most senior members to discuss and forge consensus on key policy issues.
Rear Admiral Ma Weiming (right) has been elevated to full membership of the Communist Party’s Central Committee. Photo: SCMP
Li Jie, a Beijing-based military specialist, said the move showed China’s ambition to continue expanding its naval military power.
“Ma’s promotion signals that Beijing will devote more resources to developing strategic military hardware like large warships and assault landing ships,” he said.
The EMALS is regarded as a breakthrough for the People’s Liberation Army, as it will enable China’s second home-grown aircraft carrier – known as the Type 002 – to launch larger jets with bigger payloads on longer missions.
The system could result in fuel savings of up to 40 per cent. With a higher launch energy capacity, it will also be more efficient than steam catapults, allowing for improvements in ease of maintenance, increased reliability, and more accurate end-speed control and smoother acceleration.
Why Chinese submarines could soon be quieter than US ones
Ma, who comes from Yangzhou in eastern Jiangsu province, graduated from the PLA Naval University of Engineering in Wuhan in 1987 and earned a PhD in electrical engineering from Beijing’s Tsinghua University in 1996.
A specialist in maritime propulsion, electrical engineering and related fields, he has mentored more than 400 masters and doctoral students at the naval university.
He and his team have often been recognised for their work as greater emphasis has been put on research and development amid the country’s military modernisation.
China’s first home-built carrier will use steam catapults and a ski-jump deck to launch aircraft. Photo: Handout
Ma has twice won the National Science and Technology Progress Award and in 2015 was awarded the science and technology achievement prize by the Hong Kong-based Ho Leung Ho Lee Foundation.
According to news reports, in the 1980s Ma spotted a potential flaw with an electrical component China planned to buy from overseas to use on its submarines that would have made the vessels easier to detect. Though the manufacturer denied any such problem, Ma spent five years tweaking the product so that submarines fitted with the part became harder to spot.
Three catapult launchers spotted in image of China’s new aircraft carrier
Beijing-based military expert Zhou Chenming said Ma’s promotion could be seen as a national endorsement of his work on EMALS.
“Ma was elected as a Central Committee member because the party and the country recognise the strategic importance of his work as China is expanding into a naval power with a huge maritime interest to protect,” he said.
Zhou, however, said Ma’s promotion was made two years ago, but he could not be formally made a full member until a vacancy opened up this year.
NANJING, Sept. 30 (Xinhua) — China’s spacecraft tracking ship Yuanwang-3 is sailing to the Pacific Ocean to carry out maritime monitoring missions for the BeiDou-3 and other satellites.
The ship departed Sunday from a port in east China’s Jiangsu Province. It is the third voyage of the ship this year.
Before the voyage, crew members completed preparation of supplies, carried out examinations and tests of the facilities and received tailored training to ensure the success of the missions.
This year, the ship has spent 83 days at sea and completed three missions, including maritime monitoring of a relay satellite Tianlian II and a BeiDou-3 satellite.
Yuanwang-3, China’s second-generation space tracking ship, mainly undertakes maritime tracking and monitoring tasks of high-, medium-, low-orbit satellites, spacecraft and space station.
Since it was launched more than 20 years ago, the ship has made 52 voyages and completed 83 missions on the sea, including maritime tracking of the Shenzhou spacecraft, the Chang’e lunar probe and BeiDou satellites, maintaining a 100 percent success rate.
Thirty-six others were hurt, with nine being treated for serious injuries
Bus had a tyre blowout and collided with road divider before slamming into truck in the opposite lane in Yixing, Jiangsu province, police say
The expressway reopened after a rescue operation of more than eight hours. Photo: Weibo
Thirty-six people were killed and another 36 injured when a coach had a tyre blowout and crashed into a truck on an expressway in eastern China on Saturday.
The coach, which had 69 passengers on board, collided with a road divider before slamming into a truck in the opposite lane at about 7am, the Yixing municipal police department said in a statement on Sunday.
There were three people in the truck.
The accident happened on the Yixing section of the Changchun-Shenzhen Expressway in Jiangsu province.
A rescue operation took more than eight hours, and the injured were taken to hospitals in nearby Yibing.
Nine people were seriously injured, 26 were being treated for minor injuries and one had been discharged from hospital, according to the statement.
A tyre blowout may have caused the accident on Saturday morning. Photo: Weibo
Police are still looking into the crash but said “according to our preliminary investigation, the accident was caused by a blowout of one of the coach’s front tyres”.
ahead of National Day and the week-long holiday marking it, as all levels of government try to make sure nothing goes wrong.
This month, local governments were told to check factories, restaurants, rental accommodation, scenic spots close to water and roads for safety hazards and to take measures to prevent fire, crashes or other accidents, according to media reports.
Traffic accidents are common in China, where about 200,000 people lose their lives on the roads every year, according to the World Health Organisation.
Photo taken on April 14, 2020 shows containers at the Lianyungang Port in Lianyungang City, east China’s Jiangsu Province. China’s foreign trade showed signs of stabilizing in March with export and import both beating bearish market expectations, official data showed Tuesday. (Photo by Geng Yuhe/Xinhua)
CHINDIA ALERT: You'll be living in their world, very soon 