(Yicai Global) Sept. 3 -- China’s largest wafer foundry Semiconductor Manufacturing International said it will team up with the Shanghai government to build a new USD8.9 billion factory in the eastern city to meet growing customer demand.

SMIC will set up the factory in the Lingang New Area of Shanghai Free Trade Zone to make 100,000 units of 12-inch wafers per month, the Shanghai-based company said in a statement today. The facility focuses on providing wafer foundry and technical services for 28-nanometer nodes and above.

The semiconductor giant will establish a USD5.5 billion joint venture with Lingang's management committee to take care of the construction project. SMIC will contribute at least 51 percent of the registered capital and the government will account for up to 25 percent. The remainder is reserved for third-party investors.

The chipmaker has become increasingly profitable this year. In the first half, it recorded a nearly fourfold jump in net profit to CNY5.2 billion (USD805.2 million) from a year ago, according to its earnings report. Revenue jumped 22 percent to CNY16.1 billion (USD2.5 billion).

SMIC's new online business has attracted more sales amid the Covid-19 pandemic and the subsequent shutdowns which have caused global rivals' output to fall short of demand, it explained. The Chinese company currently has controlling stakes in six fabs, located in Shanghai, Beijing, Tianjin, and Shenzhen.

SMIC's mainland-listed shares [SHA: 688981] rose 2.9 percent to CNY56.77 (USD8.80) in the afternoon.

Its Hong Kong-listed shares [HK: 0981] were 1 percent up at HKD24.20 (USD3.10).

Editor: Emmi Laine, Xiao Yi