China’s Hua Hong Group, the country’s second-largest chipmaker, has developed advanced chip manufacturing technologies capable of producing artificial intelligence chips at the 7-nanometre level, according to four people familiar with the matter. The group’s contract chipmaking arm, Huali Microelectronics, is preparing a 7-nanometre chipmaking process at its facility in Shanghai, a development that would make it only the second Chinese chipmaker to achieve such a capability. Until now, SMIC, China’s largest contract chipmaker, has been the sole domestic producer capable of manufacturing chips at the 7-nanometre node, making Hua Hong’s advancement a significant moment in China’s broader effort to build a self-sufficient semiconductor industry.
The development is understood to have taken place with the involvement of Chinese tech conglomerate Huawei Technologies, which collaborated with Huali on the 7-nanometre process, according to three of the sources, all of whom declined to be named as the information had not been made public. Research and development on the 7-nanometre chips at Huali’s Hua Hong Fab 6 facility began last year, with support from domestic equipment suppliers including Huawei-backed SiCarrier, which tested its equipment at a facility in Shenzhen. The precise manufacturing methodology, production efficiency, and the full range of equipment suppliers involved could not be independently verified by Reuters, and Hua Hong Group, Huali, its sister company Hua Hong Semiconductor, Huawei, and SiCarrier did not respond to requests for comment. Shares in Hua Hong Semiconductor surged 12 percent on Monday following publication of the report.
The milestone arrives against a complex geopolitical backdrop. Washington has eased some of its technology export controls since last year, permitting Nvidia to sell its second-most-powerful artificial intelligence chips to China. Despite that partial easing, Beijing has actively encouraged domestic firms to favour homegrown alternatives, as part of a sustained policy drive to reduce dependence on foreign semiconductor suppliers. SMIC, the only other domestic chipmaker at this technology level, currently uses immersion machines from Dutch equipment manufacturer ASML to produce its 7-nanometre chips, though analysts have noted that production yields, meaning the number of functional chips produced per silicon wafer, have remained weak.
The broader context for Hua Hong’s advancement is also shaped by a significant corporate development within the group. In December last year, Hua Hong Semiconductor announced plans to acquire a controlling stake in Huali and raise an additional 7.56 billion yuan, equivalent to approximately 1.10 billion United States dollars, to fund technological upgrades and further research at the foundry. That investment appears to be bearing its first visible results, with the 7-nanometre process now in the test production phase, reinforcing the pace at which China’s domestic semiconductor ecosystem is advancing despite ongoing international restrictions.
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