The move comes as Washington tightens technology restrictions on China, and is effectively forcing its hand. If China wants to stay ahead as a world leader it always needed a chip industry. Previously it had relied on the US for the technology, and was always expected to eventualy develop its own.
Now it seems that Donald (I take malaria pills for coronavirus) Trump has forced the Chinese government to act quickly to get a viable industry off the ground much quicker.
The Semiconductor Manufacturing International plant's registered capital jumps from $3.5 billion to $6.5 billion after the investment.
The chipmaker's stake in the Shanghai facility will drop from 50.1 percent to 38.5 percent. The plant has capacity to produce 6,000 14-nanometer wafers a month and plans to boost that to 35,000.
The risk is that China could quickly move from being a customer to a business rival for US tech and this seems to be certain and a lot sooner than expected.