China's production of advanced chips to increase 25-fold
The realization of these plans will be facilitated by the fact that SMIC and Huawei, working in this segment, will be joined by Hua Hong Semiconductor. According to the Nikkei Asian Review, the agreement has already been reached.
The existing production capacity allows Chinese companies to produce no more than 20 thousand 7-nm chips per month. Despite Western sanctions preventing the import of necessary equipment, by 2028 this number is planned to increase to 100 thousand chips per month, and by 2030 – up to 500 thousand.
Infrastructure for AI
Chinese manufacturers are interested not only in significantly increasing the production of 7nm chips, but also in mastering the process of developing 5nm chips. The demand for these products is growing as domestic demand for computing infrastructure for artificial intelligence (AI) systems increases.
The most experienced player in this market is SMIC (Semiconductor Manufacturing International Corporation), which produces 7nm chips based on ASML equipment and is working on mastering 5nm technology. But, according to some representatives of the expert community, SMIC has not yet reached a satisfactory level of production at an acceptable cost.
Hua Hong Semiconductor has begun to master the most advanced lithography technology with the support of Huawei. This allowed the company to reduce the production of chips using outdated technologies.
A number of lesser-known Chinese companies associated with Huawei are also working to master chip development technologies thinner than 10nm. Huawei and municipal governments in some regions of China provide them with financial support.
Obstacle to expansion
Under conditions when Chinese authorities influence contract chip manufacturers and force them to cede quotas in favor of priority customers, Huawei is increasing capacity. According to experts, this phenomenon, coupled with the shortage of production capacity and sanctions, is the main obstacle to the development of the Chinese AI industry and expansion of the number of contractors.
One of the main problems that Chinese companies will have to “break their heads” over is the lack of access to extreme ultraviolet lithography (EUV). This technology allows chips to be produced at the cutting edge of technology.
While there are some concerns about the ability of Chinese developers to meet domestic needs and expand globally, there are encouraging indicators.
Revenues of many Chinese technology companies are growing rapidly, and some have even managed to reach the break-even point. The authorities are actively subsidizing the purchase of components for AI infrastructure. For example, Huawei and Hygon processors already exceed 60% of the total volume of purchases.
