Wuhan Hongxin Semiconductor Manufacturing Company (HSMC) has run out of cash and its future in unclear, according to to reports in EE Times and Southern China Post. The company, which was to build a $20 billion fab, has been taken over by the municipal government in the central Chinese province of Hubei. The future of the company is uncertain.
For governments, one of the ways to build up a world-class industry is to create dozens of local companies, make them compete with each other, and then see how the fittest survive. This is not exactly how it works in the semiconductor industry for several reasons. Firstly, this industry is highly iterative by its nature, there is no place for leapfrogging here. Secondly, in a very capital-intensive industry it is close to impossible to fund dozens of companies even for governments. Thirdly, the industry has to be competitive globally, not just locally. Having realized that, the Chinese government announced this year that it would continue to support only the biggest and the fittest semiconductor manufacturers, which, in case of the Chinese foundry industry, means Semiconductor Manufacturing International Co. (Co) and Hua Hong.
