China pumped US $ 2.2 billion to avoid US technology dependence

Funds supported by the Chinese government have injected about US $ 2.25 billion into the semiconductor factory of the International Semiconductor Manufacturing Group (SMIC). According to Bloomberg, this investment will support SMIC to produce modern chips.

Respond to the US decision

This is China’s first reaction after the US move over the weekend. On May 15, the US government changed its rules to prevent Chinese chip-making companies from selling or supplying products to Huawei.

According to Reuters, the US Department of Commerce said it was amending export regulations, “strategically targeting the ability to own or buy transistors as a direct product of US software and technology.”

Semiconductors (semiconductors) are the main components of ultra-small size in computer processors as well as smartphones. The Commerce Department said its decision would cut Huawei’s current efforts to circumvent US export controls.

The regulation will be a devastating blow to Huawei, the world’s second-largest smartphone maker, as well as Taiwan’s leading transistor maker TMSC.

Under the new rules of the US Department of Commerce, foreign companies that use US technology to produce chips will need to obtain a “sub-license” from the US government before supplying the chip to Huawei, or a subsidiary. Huawei as HiSilicon.

At the same time, for Huawei to continue to receive chips from these companies, or to use transistor designs from U.S. companies, they also need approval from the U.S. Department of Commerce.

Expectations on domestic chip companies

According to the announcement made last weekend, the registered capital of the SMIC factory jumped from US $ 3.5 billion to US $ 6.5 billion after receiving investments. The chipmaker has a factory in Shanghai and is China’s largest semiconductor processing plant.

SMCI’s plant is capable of producing 6,000 semiconductor panels on a 14 nm process per month. They are also planning to increase production to 35,000 pieces.

China is betting on SMIC’s chip factory to reduce its dependence on the US. However, this process will not take place one or two days. Like Apple or Qualcomm and Huawei, the Chinese tech giant is also capable of designing chips for smartphones and other devices based on ARM architecture.

All of the above names must be given to a processing partner after design, because they do not own a chip processing factory. The world’s largest outsourcing partner is TSMC. However, the new US regulations could make it difficult for TSMC to make chips for Huawei.

In early 2020, SMIC announced it was able to produce the chipset at 14 nm and supplied it to Huawei. Huawei Kirin 710A is the first smartphone chip designed, manufactured, tested and packaged entirely in China.

However, SMIC’s technology is far behind TSMC. While SMIC can only produce chips at 14 nm, TSMC has completed the 5 nm process. That means that for every square millimeter, TSMC’s chip can integrate up to 171.3 million transistors, while SMIC’s figure is only 43 million. Therefore, Kirin 710A is Huawei’s only smartphone chip manufactured by SMIC, most of the remaining orders will be simpler chips for IoT devices.

TSMC is the first processing company, and the manufacturing company is the second in the global semiconductor industry in 2019. They have built this position for many years, surpassing their fierce rivals like Intel or Samsung. According to Huawei’s development plan leaked online, the company will have to stick with TSMC for many more years to develop chips on the 5 nm process.

South China Morning Post quoted analysts as saying that Huawei’s revenue contributed from 13-15% of TSMC’s total revenue. Even when focusing on converting a number of products for SMIC to outsource, the figure loses only about 1-3%.

“There is still a huge gap between TSMC and SMIC in terms of technology, stability and reliability,” Gu Wenjun, an analyst at ICWise, told SCMP.

Source: Zing News

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