Business Essentials for Professionals


The Revolutionary Huawei Chip Had Utilised Technology From Two US Equipment Companies

The Revolutionary Huawei Chip Had Utilised Technology From Two US Equipment Companies
According to reports quoting information from persons with knowledge of the situation, Huawei Technologies Co. and its partner Semiconductor Manufacturing International Corp. relied on US technology to develop an advanced chip in China last year.
They asked not to be identified because the information is confidential, but Shanghai-based SMIC employed equipment from California-based Applied Materials Inc. and Lam Research Corp. to produce an advanced 7-nanometer chip for Huawei in 2023.
According to previously undisclosed facts, China is still unable to fully substitute some foreign machinery and parts needed for advanced goods like semiconductors. Beijing supports Huawei's efforts to promote domestic chip design and manufacturing, as the nation has made technical self-sufficiency a top priority.
There were no comments from representatives of SMIC, Huawei and Lam.
Both Applied Materials and the Bureau of Industry and Security of the US Commerce Department, which is in charge of carrying out export controls, declined to comment.
Huawei's Mate 60 Pro and a wave of patriotic smartphone purchases in China last year were powered by a CPU built in SMIC, which was heralded in the Asian nation as a significant advancement in domestic semiconductor fabrication. The chip is still many generations behind the best parts made by international companies, but it is ahead of where the US had planned to halt China's progress.
Still, a lot of the machinery needed to build it came from outside, including parts from Applied Materials and Lam and technology from Dutch manufacturer ASML Holding NV. In October of last year, Bloomberg News revealed that SMIC had utilised ASML technology to make the breakthrough chip.
Although they have been making an effort to catch up to their American counterparts, prominent Chinese providers of chip equipment, such as Advanced Micro-Fabrication Equipment Inc. and Naura Technology Group Co., still do not offer products that are as complex or complete. Shanghai Micro Electronics Equipment Group Co., the leading lithography system developer in China, is still several generations behind ASML, the leader in the industry.
According to some of the people, SMIC acquired the American machinery prior to the US outlawing such shipments to China in October 2022. Following the implementation of regulations that forbade US engineers from providing maintenance for certain machines in China, these companies were among the American suppliers who started removing their employees from the country.
In reaction to the US limits, ASML similarly instructed US staff to cease doing business with Chinese clients; but, to the dismay of their US competitors, Dutch and Japanese engineers are still able to maintain a large number of machines in China.
It is now illegal for businesses to sell US-origin, state-of-the-art technology to Shenzhen-based Huawei or SMIC. Due to suspected ties to the Chinese military, the US has placed both tech companies on a blacklist, and Washington has been limiting China's access to sophisticated semiconductors and chipmaking machinery generally.
The trade restrictions forced SMIC and Huawei to look at ways to develop a homegrown semiconductor supply chain, and the Mate 60 Pro represented a startling step forward in that direction.
US Commerce Secretary Gina Raimondo pledged to take the "strongest possible" steps to protect national security after Huawei unveiled the new phone and Washington opened an investigation into its processor. Republican legislators, meantime, have demanded that the Biden administration totally deny Huawei and SMIC access to US technology.
ASML CEO Peter Wennink echoed the Department of Commerce officials' statement that they haven't seen proof that SMIC can produce the 7nm chips "at scale."
Technical difficulties will prevent SMIC from producing chips at a commercially significant rate if it wishes to progress its technology without ASML's cutting-edge extreme ultraviolet lithography facilities, Wennink told Bloomberg News in late January.
“The yield is going to kill you. You’re not going to get the number of chips that you need to have high volume chip production,” he said.
China has not been allowed to purchase EUV systems from ASML since the Dutch government has not authorised such exports.
Meanwhile, the US is putting more pressure on allies like Japan, South Korea, Germany, the Netherlands, and South Korea to further restrict China's access to semiconductor technology. As it places restrictions on trade at a time when Chinese companies are investing in machinery and processing power to compete in the artificial intelligence race, that endeavour is proving contentious and encountering opposition in some nations.
China's most promising contender to create AI chips to rival those made in the US may be Huawei. Jensen Huang, the CEO of industry leader Nvidia Corp., referred to the Shenzhen company as a "formidable" challenger in December.

Christopher J. Mitchell

Markets | Companies | M&A | Innovation | People | Management | Lifestyle | World | Misc