China will help the world tackle the chip shortage that has stalled the global economy. Semiconductor Manufacturing International Corporation (SMIC) has decided to invest $8.87 billion in the construction of a new plant in Shanghai, which will lead to a substantial increase in manufacturing capacity in the country.

The company signed an agreement to set up a semiconductor plant in Lin Gang, Shanghai Free Trade Zone, where duties have been lifted. Such areas have been singled out in China to attract foreign investment and develop trade. The plant will be designed to produce 100 thousand 28-nanometer wafers per month. The company will register it as a $5.5 billion joint venture with the Shanghai government, in which the firm will own at least 51 percent. After the project went public, SMIC shares jumped 2.7 percent in Hong Kong and 4.8 percent in Shanghai.

The Shanghai plant is SMIC’s second major semiconductor material expansion project. The company plans to build a $2.35 billion factory in the southern Chinese city of Shenzhen. It will produce up to 40 thousand 12-inch plates per month. SMIC is committed to strengthen its leadership in chip manufacturing in China while increasing the country’s share of global semiconductor shipments. Now all of the company’s factories are already operating at full or almost full capacity.