TechanaLye, a Japanese firm specializing in reverse engineering, has highlighted a significant technological gap between China’s Semiconductor Manufacturing International Corporation (SMIC) and Taiwan’s TSMC. The company’s analysis compared Huawei’s Kirin 9010 chip, which uses SMIC’s 7-nanometer (nm) process, to TSMC’s earlier Kirin 9000 chip built with a more advanced 5nm technology. According to TechanaLye, SMIC is trailing TSMC by about three years. Although the chips are similar in size—118.4 square millimeters for SMIC’s 7nm chip versus 107.8 square millimeters for TSMC’s 5nm—their performance remains comparable.
The Global Semiconductor Race
Semiconductors, essential to the digital economy, pack billions of transistors onto tiny chips. These circuits are measured in nanometers (nm), with each nm representing a billionth of a meter. Modern chip fabrication facilities, costing over $30 billion, produce chips as small as 3nm, with advancements pushing toward 2nm and below. The semiconductor industry, valued at $527 billion in 2022, is expected to surpass $1 trillion by 2030, with over 70 new fabs planned globally.
The competition for semiconductor dominance is fierce, with major players including China, the United States, Taiwan, South Korea, Japan, and the European Union. This competition is not just about technology but also about economic and geopolitical power.
TSMC’s Technological Edge
Taiwan Semiconductor Manufacturing Company (TSMC) is a leader in the semiconductor field, having introduced a 3nm process in 2022. This technology is used in some of the world’s most advanced chips. In contrast, SMIC, despite its recent progress, has only recently started producing 7nm chips, which are featured in Huawei’s Mate 60 smartphones. This is despite U.S. sanctions aimed at restricting Chinese companies to 14nm technology.
Historically, SMIC has been seen as a follower in the technology race. Despite substantial investment from the Chinese government since its founding in 2000, it has struggled to catch up. However, recent developments suggest that SMIC is beginning to close the technological gap.
Huawei and SMIC’s Surprising Progress
In August 2023, Huawei introduced its high-end Mate 60 smartphone, powered by a chip made using SMIC’s 7nm process. This development was unexpected, signaling that Chinese firms like Huawei and SMIC are making notable strides in semiconductor technology. The Center for Strategic and International Studies (CSIS) noted that these advancements indicate China is rapidly narrowing the technology gap.
Furthermore, reports indicate that Huawei and SMIC are preparing to mass-produce 5nm chips at new facilities in Shanghai. Although these chips are a generation behind the most advanced 3nm technology, their development reflects China’s commitment to advancing its semiconductor capabilities despite U.S. export restrictions.
The Importance of Semiconductor Leadership
Semiconductors are crucial for various technologies, including telecommunications, defense, and artificial intelligence. The ongoing push for smaller, more efficient chips follows Moore’s Law, which predicts that the number of transistors on a chip doubles approximately every two years. This has largely been true for chips designed in the U.S. and the Netherlands and manufactured in Taiwan and South Korea. Meanwhile, China’s technology, with Huawei’s latest chips at 7nm, has lagged behind the global leaders.
Maintaining a lead in semiconductor technology is vital for both economic and security reasons. Chips are essential for modern infrastructure and military systems. Any vulnerabilities or supply chain issues related to Chinese-made chips could pose significant risks, prompting the U.S. and its allies to secure their technological and economic interests.
U.S. Strategies to Maintain Dominance
Since the 1980s, the U.S. has fostered a semiconductor manufacturing landscape dominated by South Korea and Taiwan. Recently, the U.S. has increased its focus on bolstering domestic chip production, investing billions in new facilities, including a major plant in Arizona. Additionally, the U.S. government has imposed restrictions on the export of advanced semiconductor technology to China, aiming to preserve its technological edge.
The U.S. has also enlisted its allies to support these restrictions, leading companies like ASML, a Dutch chipmaker, to halt high-tech chip exports to China. Furthermore, the U.S. is limiting the flow of semiconductor talent to China, recognizing the importance of skilled professionals in advancing technology.
