BEIJING -- Hoping to carve out a sizable niche in the silicon foundry arena, China's Beijing Huaxia Semiconductor Manufacturing Co. Ltd. (HSMC) here next week will begin an ambitious chip-making campaign by breaking ground on its initial wafer fab.

HSMC plans to build a 200-mm facility, which will be capable of processing up to 45,000 eight-inch wafers per month, said Jiang Huai, vice general manager of the Beijing startup. The company's first fab will be equipped to start production in the third quarter of 2002, using a 0.25-micron process technology, Jiang told SBN in an interview today (March 27).

In total, HSMC aims to build four wafer fabs by 2010, including three 8-inch plants and one 300-mm (12-inch) facility. Overall, the company plans to invest $10 billion in these projects during the decade, according to officials.

In the first phase, HSMC's initial facility will be capable of processing 25,000 wafers per month, he said. The Beijing company plans to bring up a second frontend module in the plant to expand capacity in 2004, the official said.

The start of construction on the Beijing facility comes two months after HSMC officials announced the formation of the company. HSMC is a joint venture between Beijing-based steel giant Shougang Group, the Beijing municipal government, and two U.S.-based design houses, Alpha and Omega Semiconductor Inc. and Joshua Semiconductor Inc. (see Jan. 3 story).

HSMC itself is a separate operation from another Shougang-backed chip venture, dubbed Shougang NEC Electronics Co. Ltd., which is also located in Beijing. Shougang NEC operated a 6-inch (150-mm) wafer fab, but now plans to break ground on a new 8-inch facility in May.

HSMC and Shougang NEC are run by different management, but they are both located in the same science park, dubbed the North China Microelectronics Industry Base.

Ironically, HSMC and Shougang NEC will compete against each other in the foundry business. But the two companies are emphasizing different market segments, according to Jiang."NEC Shougang is producing DRAMs and logic," he explained. "Our business strategy is to provide foundry services in the analog and power-IC business."

HSMC believes it can carve out a viable niche in these analog and mixed-signal chip markets, he said. "The analog market is more stable," said the vice general manager.

But still, the company faces plenty of challenges. It will compete for business against established pure-play foundry giants in Taiwan and Singapore, including Chartered Semiconductor Manufacturing Pte. Ltd., Taiwan Semiconductor Manufacturing Co. Ltd. (TSMC), and Taiwan's United Microelectronics Corp. (UMC).