China is forging ahead with its plans to enhance its semiconductor industry by attempting to develop next-generation smartphone chips utilizing new manufacturing processes as early as this year. This ambitious goal is in the face of stringent U.S. restrictions that intend to decelerate the advancement of China’s chipmaking capabilities. Despite these restrictions, China’s growth in the semiconductor sector has been notable, partly driven by the collaboration between Semiconductor Manufacturing International Corp (SMIC) and Huawei in producing next-gen processors. While these companies have successfully delivered processors using the 7nm process, advancing beyond this has been a significant challenge due to limitations on importing new machinery as a result of sanctions, compelling China to utilize existing technology.
The Financial Times has reported that Huawei is currently in the process of designing 5nm chips which are anticipated to be manufactured by SMIC. Shanghai’s production facilities are being adapted to the 5nm process, which boasts greater sophistication over previous chip technologies. However, the transition to 5nm chip production is going to be expensive and complex for China as it must rely on dated deep ultra-violet (DUV) fabrication technology, in contrast to the more advanced extreme ultraviolet (EUV) technology used globally with newer equipment. This shift to newer technology is impeded by China’s inability to import such machinery due to export restrictions from the U.S. and allied nations.
Challenges in Advancing China’s Chip Fabrication with Outdated Equipment
Lithography, a critical application in the creation of integrated circuits on microprocessor wafers, is at the center of the distinction between DUV and EUV technologies. DUV lithography employs light in the 248 to 193-nanometer wavelength range, while EUV lithography utilizes light with wavelengths as short as 13.5 nanometers, facilitating the production of smaller and more efficient chips. Consequently, the limitations of China’s existing equipment necessitate increased efforts and costs to manufacture 5nm chips due to the need for more photomasks, raising the overall expense of production. Nevertheless, with partial financial backing from the Chinese government, SMIC might sustain its expansion in the chipmaking industry, even in the face of U.S. sanctions.
Comparing China’s Semiconductor Sector to Global Standards
Though China is managing to surpass initial expectations in the growth of its semiconductor industry, it remains a step behind leading global players. For instance, South Korea’s tech giant Samsung has already announced its timeline to pioneer the 2nm process by 2025, and Taiwan’s semiconductor authority TSMC has commenced mass production of 3nm chips, particularly for tech conglomerate Apple. Ultimately, China is expected to confront significant obstacles if it continues to depend on older manufacturing technologies. The Chinese semiconductor sector will need to innovate or access new production methods to keep pace with the rapidly advancing global chip industry.
