SHENZHEN, China/SAN FRANCISCO, Calif., Sept. 5 (Reuters) – Huawei Technologies Co.’s breakthrough in advanced chip manufacturing underlines China’s resolve and ability to fight back against U.S. sanctions, but the effort requires significant Analysts said it would likely be costly and could prompt the U.S. government to tighten regulations.
Huawei unexpectedly released its latest smartphone, the Mate 60 Pro, during Commerce Secretary Gina Raimondo’s visit to China last week as the government prepares a new $40 billion investment fund to shore up the developing chip sector. Announced.
According to a teardown by Ottawa-based TechInsights, the Mate 60 Pro is powered by a proprietary Kirin 9000s chip, using advanced 7 nanometer (nm) technology from the country’s top contract chipmaker SMIC (0981. Manufactured by HK).
Its findings and early user claims about the phones’ strong performance come despite the US government increasing sanctions in recent years to cut off access to advanced chip-making tools. It shows that some progress has been made in the development of the chip.
“This shows that China’s semiconductor industry was able to make technological advances without EUV tools,” said Dan Hutchison, an analyst at TechInsights. “It shows the resilience of technology.”
EUV refers to extreme ultraviolet lithography, which is used to manufacture advanced chips of 7 nm and above.
“At the same time, this is a major geopolitical challenge for countries seeking to restrict access to critical manufacturing technologies, potentially resulting in even greater restrictions than those that exist today.”
Jefferies analysts said Tech Insights’ findings could trigger an investigation by the U.S. Department of Commerce’s Bureau of Industry and Security, sparking further debate in the U.S. about the effectiveness of sanctions and potentially tougher competition legislation being prepared by Congress. He said it could encourage the inclusion of technology sanctions. China.
“Overall, the US-China tech war is likely to intensify,” they said in a note.
A representative for the U.S. Department of Commerce did not immediately respond to a request for comment Tuesday morning.
Huawei declined to comment. SMIC and China’s State Council, which handles media inquiries on behalf of the Chinese government, did not immediately respond to requests for comment.
limited results
The most advanced chips SMIC was known to produce so far were 14nm, which the US government banned in late 2020 from acquiring EUV machines from Dutch company ASML (ASML.AS). This is because.
But TechInsights said last year that SMIC still believes it has succeeded in producing 7nm chips by tweaking simpler DUV machines that are freely available from ASML.
Some analysts, including Jefferies, said Huawei may have bought technology and equipment from SMIC to make chips rather than partnering with them.
Regardless of who makes the chips, Gabekal Dragonomics analyst Tilly Chan said low yields reduce the number of usable chips from each wafer and drive up costs. He downplayed the success, citing new export restrictions that will limit SMIC’s production. Access to more immersion DUV machines.
“They have just shown that they are willing to accept costs that are much higher than what is normally considered worth… Huawei can sell phones using these chips on the regular market. “It’s only a combination of Huawei’s own significant financial resources and generous government subsidies that will lower the price,” Zhang said.
Reuters reported on Tuesday that China plans to launch a new state-backed investment fund aiming to raise about $40 billion in the chip sector as it steps up efforts to catch up with the United States and other rivals.
Some research companies say that the yield rate of SMIC’s 7nm process is less than 50% compared to the industry standard of more than 90%, and that shipments will be limited to about 2 million to 4 million units, but Huawei We predict that this will not be enough to regain its former dominance in the smartphone market. .
Analysts at Jefferies predict that Huawei is preparing to ship 10 million Mate 60 Pros, but that it may be difficult to support that volume with Chinese-made 7nm chips.
In that case, it could be a 10nm chip, but the estimated yield of 20%, which refers to the number of chips running on each silicon wafer, would be far below the 90% for most consumer devices, Jeffries said. Ta.
Doug Fuller, a semiconductor researcher at Copenhagen Business School, said, “(U.S.) regulations impose high costs on producing regulated technologies in China,” and the Chinese government will bear the burden. He added that it is likely that he did.
Reporting by David Kirton and Max Cherney; writing by Brenda Goh.Editing: Miyoung Kim, Nick Zieminski
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