The U.S. Is Successfully Undermining AI Chip Manufacturing in China, SMIC Confirms

Semiconductor Manufacturing International Corp, or SMIC, is the largest semiconductor manufacturer in China, holding approximately 5% of the global market share. The company currently has the capacity to produce 7 nm integrated circuits and is also likely capable of manufacturing 5 nm circuits. This has been confirmed through thorough analyses conducted by several U.S.-aligned laboratories, including the Canadian firm TechInsights, which examined the Kirin 9000S SoC integrated into Huawei’s Mate 60 Pro smartphone.

SMIC is a critical asset for Chinese President Xi Jinping and his government in advancing China’s technological development. While Hua Hong Semiconductor and SMES are also significant players in the chip manufacturing sector, SMIC is China’s primary leader in the industry. The company is partially state-owned and has strong backing from the Chinese government. In fact, Xi’s administration has invested heavily in its chip manufacturers. According to Reuters, it has injected around $41 billion into the sector.

SMIC’s Co-CEO Acknowledges That U.S. Sanctions Are Significantly Impacting the Company

Over the past two years, a substantial portion of the sanctions imposed by the U.S. and its allies on China has been aimed at preventing the nation from developing the capability to manufacture advanced integrated circuits. These chips have a wide range of applications, from supercomputers to next-generation weaponry. However, Western governments are particularly concerned about their use in artificial intelligence, which is the semiconductor market segment with the highest growth potential.

SMIC co-CEO Zhao Haijun recently acknowledged that U.S. restrictions are hindering the company from fully capitalizing on the increasing demand for AI chips. He said, “We can’t produce competitive products such as GPUs due to caps on manufacturing nodes, but we can produce other AI-related products such as analog and power-supply chips used for AI products.”

Zhao’s statements clearly indicate the significant impact of the company’s restricted access to advanced lithography equipment produced by the Dutch firm ASML. However, he concluded his remarks on a positive note, saying, “AI is a blessing for semiconductor manufacturing. It can bring us business growth in many years ahead.”

SMIC’s co-CEO predicts that if demand for AI-integrated circuits continues to rise at the current rate, the chip manufacturing industry will grow by 10% by 2025. Conversely, if demand doesn’t keep pace, growth in this sector is expected to be much more modest, around 4%.

Image | ASML

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