Huawei Technologies Co Ltd and China’s top chipmaker SMIC (0981. H.K.) have built an advanced 7-nanometer processor to power its latest smartphone, a teardown of the handset by analysis firm TechInsights showed. The new Kirin 9000s chip is the first to use SMIC’s most advanced technology and suggests that Beijing is making headway in its attempts to build a domestic chip ecosystem, the research firm said. The revelation sent SMIC’s shares up by 10 percent.
The breakthrough will likely rattle the U.S. further, which has been pressing China to curb its advanced technology development. It will also help Beijing’s drive to become self-sufficient in chipmaking, a key objective of President Xi Jinping’s Made in China 2025 plan.
The research firm said that SMIC, the world’s fourth-biggest maker of semiconductor chips, reworked its production processes to enable it to manufacture the 7nm processors found in Huawei’s Mate 60 Pro. The process, known as extreme ultraviolet lithography, can etch a chip’s circuitry onto its silicon substrate much more efficiently than older methods, cutting manufacturing costs and energy consumption.
It is one of the most critical steps in SMIC’s efforts to close the gap with global leaders Intel Corp (INTC), Samsung Electronics Co Ltd and Taiwan Semiconductor Manufacturing Co Inc (TSM). According to analysts, Its chipmaking capabilities are three to five years behind industry leaders.
To catch up, SMIC launched a fund in 2018 to invest in the latest chipmaking technology. The fund, managed by state-owned investment firm the Big Fund, is believed to be worth $17 billion.
Despite SMIC’s advances, its ability to produce a 7nm chip will depend on whether it can access a new EUV lithography machine. The technology can etch a chip’s circuitry more precisely than existing machines, boosting performance and lowering production costs. U.S. trade restrictions have blocked the export of such equipment to China.
The U.S. also sanctions SMIC for allegedly cooperating with the military. The company denies working with the military. Last year, Huawei ran out of in-house-designed smartphone chips after the U.S. restricted access to the crucial tooling needed to make the most advanced chips. The company has since resorted to using Qualcomm’s (QCOM) products.
