China’s SMIC Advances AI Chip Production Despite US Restrictions

China’s SMIC Advances AI Chip Production Despite US Restrictions

China’s SMIC Takes on 5nm Challenge, Accelerating AI Chip Self-Reliance Despite U.S. Restrictions

Despite U.S. export controls on advanced semiconductor equipment, Chinese chipmakers are accelerating the expansion of their advanced manufacturing processes.

Backed by the Chinese government’s support, they are making all-out efforts to meet the growing demand for high-performance chips driven by the artificial intelligence (AI) industry through domestic production.

According to Nikkei Asia on Feb. 25, SMIC, China’s largest foundry, is attempting to achieve performance comparable to 5-nanometer (nm) class through its ‘N(Node)+3 process.’ The technology is reportedly being applied to Huawei’s new Kirin 9030 chipset and some products in the Ascend series of AI-dedicated chips.

Hua Hong Semiconductor, China’s second-largest foundry, is also reportedly moving away from its general-purpose-focused production structure to expand into advanced processes. It is explained that Huawei is providing technical support, while central and local governments are adjusting production capacity allocation to prioritize AI chip production.

Huawei plans to launch next-generation AI chips including the Ascend 950 PR and Ascend 950 DT this year to expand domestic AI computing infrastructure. The company is accelerating the establishment of its own ecosystem amid intensifying technological hegemony competition with the United States.

However, assessments suggest that it will not be easy to threaten global leading companies in the short term.

According to market research firm TrendForce, TSMC ranked first with a 71.0% share of the global foundry market in the third quarter of last year.

Samsung Electronics came in second with 6.8%, while SMIC remained in third place with 5.1%.

The restriction on importing extreme ultraviolet (EUV) lithography equipment, a key tool for advanced processes, due to U.S. export controls is also a constraining factor.

While demand is surging due to AI infrastructure expansion by Chinese tech companies such as Alibaba and Tencent, analysis suggests there are limitations in production efficiency and yield to meet all domestic demand in the short term.

The Wall Street Journal reported in November last year that as the shortage of advanced AI chips in China intensified, Chinese authorities adjusted SMIC’s production allocation to prioritize strategic companies such as Huawei.

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