By Chinese tech giant Huawei has showcased its latest flagship smartphone, the Mate 60 Pro, which features a groundbreaking chip manufactured domestically. According to an analysis conducted by research firm TechInsights, the device is equipped with a 7-nanometer processor produced by Semiconductor Manufacturing International Corp. (SMIC), China’s largest chip maker.
Although Huawei’s chip technology still trails behind that of industry leaders Taiwan Semiconductor Manufacturing (TSM) and Intel, it represents the most advanced chip-making capability documented by TechInsights within China thus far. Remarkably, this progress has been achieved despite United States’ efforts to restrict China’s access to crucial chip-making equipment.
Notably, the analysis raises a significant question: Was the 7-nanometer chip produced after the U.S. imposed sanctions that prevented companies like Taiwan Semiconductor from exporting advanced chips to China and restricted the sale of cutting-edge “lithography” machines to Chinese counterparts such as ASML Holding?
Tilly Zhang, an expert at China-focused economic research consultancy Gavekal Dragonomics, suggests that the most plausible explanation is that Huawei’s new Kirin 9000s chip was manufactured by SMIC using pre-sanction equipment acquired legally.
Both Huawei and SMIC have yet to comment on this development.
Technological Breakthrough Raises Questions About SMIC’s Competitiveness
SMIC, one of the leading semiconductor manufacturers in China, recently made a technological breakthrough by developing its own 14-nanometer chips. However, industry experts suggest that this achievement may not pose a significant competitive threat to global chip manufacturers like Taiwan Semiconductor, Intel, and Samsung Electronics.
According to Zhang, an industry analyst, SMIC most likely used deep ultraviolet (DUV) lithography systems for this development, which is an older technology compared to the advanced extreme ultraviolet (EUV) lithography used by other manufacturers. The use of DUV machines would have increased costs for SMIC and may hinder their ability to produce chips with smaller and more advanced “nodes” – the size of the circuitry on a chip.
As a result, the impact of SMIC’s achievement on competitors like Taiwan Semiconductor, Intel, and Samsung Electronics is expected to be relatively low. These companies are already working on the latest-generation 3-nanometer processors and are ahead in terms of technological advancements.
In terms of market reaction, investors seemed unaffected as trading resumed. Both Intel shares and American depositary receipts of Taiwan Semiconductor were up by 1.5% in recent trading.
However, this technological breakthrough could have significant implications for Huawei in its domestic market, particularly regarding competition with Apple. Analysts at BofA Securities suggest that if Huawei is able to supply and scale its home-grown Kirin 9000S chips, it could increase its shipments and regain market share, potentially posing a downside risk to iPhone sales in the Asia Pacific region.
While Huawei’s achievement is commendable, industry experts believe that its impact on the overall semiconductor industry is limited. The company has demonstrated a willingness to accept higher costs than usual, which may not be practical or feasible for other manufacturers.
In conclusion, SMIC’s recent development raises questions about its competitiveness in producing advanced chips. Although this achievement may not pose a significant threat to global chip manufacturers, it could potentially benefit Huawei in its home market, affecting its competition with Apple.
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