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Tim Culpan

An $11 Billion Distraction for China's Chip Ambitions

Beijing wants to boost its semiconductor prowess, but instead the nation’s leading company is doubling down on mediocre technology.

Chipping away.

Chipping away.

Photographer: Qilai Shen/Bloomberg

Year after year, we hear about China’s ambitions to become a leading contender in the global chip race. Yet time and again its companies and government make decisions that seem destined to ensure the nation remains an also-ran.

Latest among the befuddling choices is the Shanghai government signing on to own up to 25% of a massive new factory that Semiconductor Manufacturing International Corp. intends to build. The $8.9 billion budget for this facility adds to a $2.35 billion plant that SMIC is already planning 800 miles south in Shenzhen. That earlier project will also be minority held and funded by the local government.