Recently, Huawei and SMIC achieved a significant technological advancement by developing 5nm technology. However, since the production will rely on older DUV machinery, the road ahead is fraught with challenges for China’s largest foundry, likely leading to yield issues. This setback also impacts the 7nm process, originally adopted by TSMC in 2018, placing SMIC several generations behind its competition.
Despite substantial financial backing from the Chinese government, SMIC struggles to overcome the 7nm hurdle, suggesting Huawei may have to depend on this outdated technology until at least 2026. Although rumors surfaced about Huawei utilizing a 6nm chipset for its Mate 70 series, it’s likely just an enhanced version of the 7nm process rather than a new technology.
Further complicating matters are U.S. trade sanctions, which have heavily impacted Huawei’s ambitions in AI chip development, pushing them back by three generations. TSMC, under U.S. directive, has ceased 7nm chip shipments to Chinese customers, leaving China with limited options. Their primary reliance is on domestic foundries like SMIC to break free from international dependency, particularly from giants like TSMC and Samsung. However, challenges persist.
The U.S. restrictions also prevent ASML, a leading supplier of advanced EUV equipment, from selling necessary machinery to SMIC. Without this cutting-edge technology, SMIC must make do with its current arsenal. There are efforts, backed by significant financial input from the Chinese government, to develop indigenous EUV capabilities, but this endeavor could take several years to come to fruition.
According to well-informed sources familiar with both SMIC’s and Huawei’s strategies, it appears these companies will remain reliant on the dated 7nm process until at least 2026. This is further complicated by SMIC’s ongoing struggle with 7nm yields, making any attempt at producing 5nm wafers an imprudent financial endeavor.
The introduction of Huawei’s Kirin 9100 chip for the new Mate 70 series is reportedly based on this improved 6nm process, which might simply be a refined version of the 7nm technology with a higher transistor count. For Huawei to thrive, SMIC must focus on enhancing its yield rates for advanced manufacturing processes. With the resources at its disposal thanks to the Chinese government, success is possible, unless obscured factors are inhibiting progress.
