By Charles Mutinda, IMBA (2009)

On April 17, 2008 students undertaking the Operations Management course as part of their International MBA program curriculum, got a rare chance to set foot inside one of the world’s most advanced semiconductor foundries based in Beijing, China. Fifty randomly selected students embarked on a 1-hour trip across Beijing from the University district in the Northwest to the plant in southeast  of the city. The Beijing plant was opened in late 2004 after almost two years of construction work. The estimated value the investment in this facility is in the  billion’s of US Dollars.

SMIC (Semiconductor Manufacturing International Corporation) had graciously allowed the students to participate in a 2-hour plant tour to obtain first hand experience of how real manufacturing plants run operations, enabling students to better appreciate the concepts that they have been learning in lectures. SMIC was listed on the New York ((NYSE: SMI) and Hong Kong (SEHK: 981)) stock exchanges in 2004. It is the largest and most advanced semi-conductor manufacturer in Mainland China, providing integrated circuit (IC) manufacturing service from 0.35 micron (？m) to 65 nanometer(nm) and finer line technologies. Headquartered in Shanghai, , SMIC have two 300-millimeter(12”) wafer fabs (fabrication facilities) in its Beijing mega-fab, a 200-millimeter (8”) wafer fab in Tianjin, and an assembly and testing facility in Chengdu.

In recent years the Chinese market has grown tremendously - becoming the largest market for IC from - 6% of global demand in 2000 to 26% in 2006. China’s IC demand  currently outstrips supply and as such SMIC are currently developing new sites on the Mainland.  They also have customer service and marketing offices in the U.S., Europe, and Japan, and a representative office in Hong Kong.   SMIC is a dedicated full service provider to its customers and provides  a comprehensive suite of value-added services to help customers bring their products to market quickly and cost effectively. They offer design services, mask making and wafer manufacturing to their clients.

Interestingly enough, while 90% of their customers are internationally owned enterprises, about half the output from their Mainland facilities is delivered directly to China based locations.  It is largely because of this that SMIC will continue to focus on expanding capacity in its plants in China. . They are primarily in the business of acting as an outsourcing partner for their clients and delivering specific lines of products to order by customers. The wafers produced in the plant are used in final products that include PCs (Servers and Desktops), mobile phones, digital TVs, and PMP (MP3 & MP3) devices.

The Beijing plant which runs 24 hours a day, in a four-shift cycle, has about 2,000 of the more than 10,000 members of staff employed globally by SMIC. The complement of staff includes highly-trained high school leavers and a large pool of engineers to manage the operations, many of whom are masters graduates from Tsinghua University and other top-tier universities in China. The Beijing plant, which is running at almost full capacity, can produce super thin wafers ranging from 0.13 ？m to 65 nm, which allows them to make wafers suitable for the most advanced computer processors .

The wafer production industry is highly competitive and cost driven. SMIC opted to setup its facilities in China to take advantage of the highly productive and cost effective labor, well-educated pool of engineers in the market, and to have close proximity to their client’s delivery points. SMIC competes by differentiation in its management style, CSR (Corporate Social Responsibility) and ethical approach to employment. Among the many facilities that they provide their staff with is a bilingual school with teachers from the US, Canada, Europe, Africa, Malaysia and Japan working alongside Chinese teachers. They also have a recreation center that has a fully featured sports center.

SMIC has a special license to import the highly specialized high-tech equipment costing in the region of a US$ 1 million a piece, required to run this facility from the US. While the equipment and technology is ubiquitous, SMIC’s management believes that outstanding operations management in their plants is the key to profitability and keeping its competitive edge in this price sensitive industry.

Upon entry to the super clean facility the students were required to wear special gear to cover their shoes.  They then ascended several floors where they were inspected and required to wear additional protective clothing to ensure that they didn’t bring in any contaminants into the production environment.  Each of the  12” ultra-delicate and super-shiny wafers produced in the facility is very susceptible to dust.  At SMICs highly efficient plant it takes roughly 2 months to produce each 12” wafer through a process of repetitive and advanced electro-chemical processing.  It is critical to eliminate any chances of contamination which would render the wafers obsolete. The students were allowed to view the entire multi-step production process through windows that enclosed the core fabrication area of the plant.

As part its improvements of the production process SMIC has registered 1,826 patents as at the end of 2007. They manage and operate a wafer fab in Chengdu owned by Cension Semiconductor Manufacturing Corporation.  There is also a wafer fab under construction in Wuhan owned by Wuhan Xinxin Semiconductor Manufacturing Corporation. 

Tomokazu Numa (Japan) commented, “ I think this is the cleanest place I have been to, and I can see why - one really needs to protect this investment in the development of these wafers. I was equally impressed with the very expensive equipment and the utilization of robots in the manufacturing process, to transport the delicate and fragile wafers around the facility. They have even gone as far as separating processes within the fab that might generate dust, to minimize any chance of contamination: which is very impressive.”

Xiang Dong(CHINA), commented “I was amazed that China hosts such advanced technologies. I am glad so see that the government has put policies in place to support the growth of these kinds of industries in Beijing and the rest of China”. He added, “Although a lot of equipment is imported into China, in the future I see local companies being capable of delivering this technology”.

At the end of the session the students were given a detailed presentation on the history and developments at SMIC. This was followed by a Q&A session