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February 6, 2024
The Financial Times says “China on cusp of next-generation chip production despite US curbs”, by which it means the 5nm manufacturing process. The story goes on to claim, according to shady ‘people familiar with the move’ that the Chinese SMIC foundry will be making these chips ‘as early as this year’ based on Huawei Kirin smartphone SoC designs.
There are a lot of ifs and buts in the FT claims, and the most likely source of them is people with an interest in painting Chinese chip-making capability in the most flattering light, but they may still be accurate. If, hypothetically, SMIC is able to produce 5nm Huawei chips in commercially viable quantities this year, that would indicate it is catching up with the most cutting edge manufacturers – TSMC and Samsung – which, despite being based in East Asian countries, fall under the US sphere of influence.
Huawei got America’s attention when it launched a new flagship phone in the middle of last year that apparently contained a competitive chip in spite of US efforts to starve the company of exactly that. The general assumption is that it contained a 7nm Kirin chip made by SMIC, which was even then a bit more advanced than the Chinese domestic chip industry was thought capable of.
The normal cadence for moving to the next semiconductor manufacturing node is two years, so if SMIC has been able to move from 7nm to 5nm in one year, that would be an impressive feat. It should be stressed that the 2nm process is expected to become a reality this year outside of China, so SMIC is still at least four years behind, but it seems to be gaining ground.
Perhaps the most galling aspect of the FT story for the US is the suggestion that this has been made possible by a hoarding of US-made kit, as well as that of Dutch company ASML, which has cornered the market in some of the kit needed to make the most advanced chips. This story provides further evidence of the failure of the US to suffocate Chinese technological progress.
If SMIC’s 5nm efforts go well it is expected to divert a major proportion of its resources to the manufacture of AI chips, also made by Huawei. In fact, Reuters reports that Huawei is already prioritising the manufacture of its Ascend AI chips over its Kirin smartphone ones. Another Reuters report reckons the Ascend 910B might be better than the diminished chips US market leader Nvidia is being allowed to sell into China, resulting in huge domestic demand for them.
Again, there are many ifs and buts to this narrative and there will doubtless be many more anonymous briefings to the western media designed to talk-up China’s chip sector. But the broad inference is that US efforts to use its geopolitical muscle to starve China of cutting-edge technology seem to be failing. Turns out it’s not easy to control the free market.
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