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Chinese technology firms have been hamstrung over the past several years as the US has increasingly blocked access to the latest microchips. The country’s largest chipmaker, SMIC, surprised everyone with the release of a 7nm processor last year, and now rumors point to a 5nm release. This improvement could advance China’s AI ambitions, making the US-led technology blockade look even more ineffective.
Action against Chinese technology giants began during the Trump administration with the addition of companies like Huawei to the government’s Entity List, which prevents the transfer of US technology. The Chinese government’s solution was to put its full weight behind homegrown chip manufacturing. The Biden administration has further clamped down by restricting China’s access to the latest lithography machinery for manufacturing chips, leaving SMIC with technology intended for larger and less efficient process nodes.
SMIC is allegedly on the verge of releasing the new 5nm chips, which have been designed by Huawei’s HiSilicon subsidiary. They will be produced in a pair of new factories in Shanghai. The chips will appear first in flagship smartphones, but SMIC has big plans for 5nm if that works. It hopes to produce server chips and AI accelerators at 5nm, which would close the gap between Chinese designs and the latest AI hardware from Nvidia. Like lithography technology firms, Nvidia is barred from exporting most of its AI accelerators to China.
Chinese chip foundries are making do with deep ultraviolet lithography (DUV) machinery. Until late last year, companies in China were still allowed to purchase these devices from companies like ASML. The more advanced extreme ultraviolet lithography (EUV) equipment designed for sub-7nm process nodes was already blocked. Despite the equipment shortcomings, SMIC managed to produce the Kirin 9000S (above) in 2023, a 7nm chip that it should not have been able to make. The 9000S wasn’t as powerful as the corresponding 2023 chips from Taiwan-based TSMC, but it was a huge leap forward for China’s homegrown ARM designs.
Credit: 微机分 WekiHome
SMIC has reportedly modified its DUV machinery with deposition and etching components that allow them to surpass their design limits. These hard-won advances do not come without consequence. Sources tell the Financial Times that SMIC will need to charge 40-50% more than TSMC at the 5nm node. Due to the suboptimal equipment, the yield of usable 5nm chips with SMIC’s lithography workarounds is roughly one-third that of TSMC.
Chipmaking experts have warned that attempts to contain Chinese technology firms with trade sanctions are doomed to fail. The country is currently hurting from the loss of Western chips, but the potential military and security applications of advanced chip designs ensure China won’t give up.