A Chinese flag next to a printed circuit board with semiconductor chips.
Florence Lo | Reuters
China’s biggest chipmaker SMIC seems to have been manufacturing advanced chips in the previous couple of months — defying U.S. sanctions designed to decelerate Beijing’s progress.
But there are still some major challenges to China’s bid to grow to be more self-sufficient within the semiconductor industry, with questions swirling across the long-term viability of its latest advancements.
What’s the most recent?
SMIC is China’s biggest contract semiconductor manufacturer. The nanometer figure refers to the scale of every individual transistor on a chip. The smaller the transistor, the more of them might be packed onto a single semiconductor. Typically, a discount in nanometer size can yield more powerful and efficient chips.
The 7 nanometer process is seen as highly advanced on this planet of semiconductors, regardless that it is not the most recent technology.
It was a giant deal on the time. But last week, the Financial Times reported that SMIC is establishing recent production lines to make 5 nanometer chips for Huawei. That might signal even further advancement for China’s biggest chipmaker.
The chips in Apple’s latest high-end iPhones are made on a 3 nanometer process.
Why is that this a giant deal?
How is SMIC doing this?
Without EUV tools, experts thought, SMIC would find it difficult to make 7 nanometer and smaller chips, or would at the least find it expensive to accomplish that.
So when the Huawei Mate 60 got here out last 12 months with a 7 nanometer chip, that raised a whole lot of eyebrows.
One expert told CNBC on the time that SMIC is probably going using older chipmaking tools to make more advanced chips.
The FT reported something similar last week. The newspaper, citing two individuals with knowledge of the plans, reported that SMIC is aiming to make use of its existing stock of U.S.- and Dutch-made semiconductor equipment to supply 5 nanometer chips, an advancement on the 7 nanometer.
“SMIC is working very closely now with each domestic tool makers, leveraging its existing base of advanced lithography gear, and drawing on other outside expertise, resembling from Huawei, to consistently improve yields on advanced node processes,” Paul Triolo, an associate partner at consulting firm Albright Stonebridge, told CNBC via email.
“So for now it is feasible for SMIC to proceed to enhance capabilities and yields at 7 and shortly 5 nm, for a small number of consumers, mostly Huawei.”
China’s challenges
Using older equipment to make more advanced chips poses two major challenges.
The primary is that it’s dearer to supply the semiconductors than if more advanced tools and machinery were used. The second is a difficulty around yield — the variety of usable chips which might be produced and might be sold to customers. With older equipment, the yield can be lower.
The FT also reported, citing three people near Chinese chip corporations, that SMIC needed to charge 40% to 50% more for products from its 5 nanometer and seven nanometer production processes than TSMC does at the identical nodes.
TSMC, or Taiwan Semiconductor Manufacturing Company, is the world’s largest and most advanced contract chip manufacturer. TSMC makes semiconductors for corporations from Apple to Nvidia.
Pranay Kotasthane, chairperson of the high tech geopolitics program on the Takshashila Institution, told CNBC that SMIC and China could keep throwing money at the method, but ultimately, costs will proceed to rise with each more advanced generation of chips — unless the corporate can get its hands on an ASML EUV machine.
“SMIC might overcome current yield issues by investing more cash. This investment might even come from governments as this has grow to be a difficulty of national prestige,” Kotasthane said via email.
“However the extent of underwriting higher costs will only increase with every subsequent generation of chips. The prices will keep compounding unless China finds a serious alternative for EUVs.”
