{"id":57875,"date":"2023-09-07T01:12:30","date_gmt":"2023-09-07T05:12:30","guid":{"rendered":"https:\/\/ifintechworld.com\/markets\/huawei-aside-chinas-chip-problems-are-getting-worse\/"},"modified":"2023-09-07T01:12:33","modified_gmt":"2023-09-07T05:12:33","slug":"huawei-aside-chinas-chip-problems-are-getting-worse","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=57875","title":{"rendered":"Huawei Aside, China’s Chip Problems Are Getting Worse"},"content":{"rendered":"
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This article is from the free weekly Barron\u2019s Tech email newsletter. Sign up here to get it delivered directly to your inbox.<\/em><\/p>\n

Reality Check<\/strong>. Everyone loves a good story. The latest one to get traction among media outlets this week was how China had somehow circumvented U.S. chip sanctions and achieved a significant manufacturing breakthrough. I saw one headline citing \u201cChina\u2019s chip breakthrough\u201d and another that said a new Huawei phone had \u201cdefeated U.S. chip sanctions.\u201d<\/p>\n

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Some reports even suggested that China was now on its way to catching up to the West in making cutting-edge semiconductors.<\/p>\n

But the significance of the latest phones made by China\u2019s Huawei has been overstated. In fact, after a new round of restrictions that went into effect last week, China\u2019s chip-making capabilities are actually likely to get worse\u2014not better. (Barron\u2019s<\/em> covered the Huawei news in a more straightforward manner.)<\/p>\n

Semiconductors made using more densely packed transistors (measured in nanometers ) have historically meant faster and more power-efficient chips. Following Huawei\u2019s recent launch of its Mate 60 Pro smartphone, industry observers latched onto a report from research firm TechInsights noting that the phone\u2019s main chip was manufactured on a 7-nanometer node by China\u2019s largest domestic chip maker
\n Semiconductor Manufacturing International Corp.
\n (SMIC). They said it was a major advance for the country\u2019s chip industry.<\/p>\n

But China making 7nm semiconductors isn\u2019t new. TechInsights noted that SMIC had used the process for a Bitcoin mining chip last year. And even assuming SMIC can achieve 7nm production for Huawei on a larger scale than before, it would only match what
\n Apple
\n began using for iPhone chips back in 2018. Being five years behind is an eternity in technology. <\/p>\n

Huawei has been notably quiet about the details of its new smartphone. Typically, when a company comes out with a new device, it loudly markets improved processors. But this time, Huawei has been conspicuously silent for the Mate 60 Pro. <\/p>\n

Huawei and SMIC didn\u2019t respond to requests for comment about the manufacturing process for the new phones.<\/p>\n

There are two fundamental problems for China going forward. First, the country faces an insurmountable wall to progress beyond 7nm, to 5nm and 3nm, which are fast becoming the industry standard in the U.S. These lower node processes require access to the most advanced chip-making machines from
\n ASML Holding\u2019s
\n (ASML), known as extreme ultraviolet, or EUV, lithography. But sales of EUV to China have been restricted since 2019.<\/p>\n

SMIC\u2019s current capabilities could even start to deteriorate as it loses access to key parts. The chip maker is likely using older lithography systems known as deep ultraviolet, or DUV, to manufacture the 7nm chips. But starting Sept. 1, ASML came under additional export control restrictions for its DUV systems, making it more difficult for China to get the best DUV technology. SMIC\u2019s existing DUV systems could break down if the company can\u2019t get the parts and services it needs to maintain chip production.<\/p>\n

Despite this week\u2019s fanfare, not much has changed. China remains far behind the West in semiconductor manufacturing technology, and it\u2019s unlikely to show much improvement soon.<\/p>\n

This Week in Barron\u2019s Tech<\/h2>\n

Write to Tae Kim at tae.kim@barrons.com or follow him on X at @firstadopter<\/a>.<\/p>\n<\/p><\/div>\n<\/div>\n