Taipei, Taiwan – China faces surge as it tries to overtake US and its allies in semiconductor sector

On Wednesday, Washington restricted sales to China of some Nvidia and AMD advanced graphics processor units (GPUs) used in artificial intelligence applications and supercomputers.

The move follows last month’s announcement by the US Department of Commerce about a ban on exports to China of electronic design automation (EDA) software used to produce next-generation chips.

Meanwhile, Washington has urged its East Asian partners Taiwan, South Korea, and Japan to form a “Chip 4” industrial alliance, cutting China off from the international tech ecosystem and developing its own industries through the passage of the CHIPS Act. We are strengthening our efforts to He will provide $52 billion in subsidies to companies that manufacture chips in the United States.

“The United States is seeking to strengthen its central role in the global semiconductor ecosystem and prevent China from producing cutting-edge chips,” says the forthcoming book, Chip War: The Fight for the World’s Most Critical Technology,” Chris Miller told Al Jazeera.

“Semiconductor control will not only shape the future of the global economy, from cloud computing to autonomous driving, but it is also the foundation of military power.”

Semiconductors have emerged as one of the fiercest battlefields in the fierce competition between the US and China. Serving as the lifeblood of the modern economy, from iPhones to fighter jets, chips are seen as essential to unlocking the technological breakthroughs of the future. In other words, tomorrow’s global balance of power may rest on the extremely thin chips being developed today. .

China, like other major economies, relies heavily on semiconductor production in Taiwan, which supplies more than 90% of the world’s supply of high-end chips, but has recently experienced a significant decline in domestic industrial development. progress has been made.

In July, TechInsights researchers reported that China’s national champion Semiconductor Manufacturing International Corporation (SMIC) has likely gained the ability to manufacture 7 nanometer (nm) chips. Semiconductors are usually compared by the gate length of a transistor, with smaller gates generally having more processing power.

Beijing-backed SMIC is currently ramping up its foundry capacity, with plans for a new fourth plant in the northern city of Tianjin. SMIC did not respond to Al Jazeera’s request for comment.

Dylan Patel, an industry analyst and author of the newsletter Semianalysis, told Al Jazeera: “It’s a fully functional node, although it’s missing some features.”

“This is the first real sign that we have broken through a seemingly insurmountable barrier. Now we need to incrementally improve our designs and scale up production to higher value chips.”

China hampers acquisition of extreme ultraviolet (EUV) lithography machines, the latest equipment for making advanced chips, after Dutch manufacturer ASML was denied an export license after US pressure on Amsterdam It has been taken.

However, Chinese companies can still use inefficient deep ultraviolet (DUV) lithography machines. DUV lithography machines typically manufacture high-end semiconductors using larger wavelength beams used to etch patterns on less advanced chips.

While Washington has flagged plans to expand its ban on chip-making equipment, China has been hoarding ASML’s DUV lithography equipment, buying 81 units last year alone.

“SMIC can manufacture a 7nm process in DUV and possibly mass produce it, but it won’t be cost effective.

“With DUV resolution, we are pushing the technology to its limits,” Yang said, comparing it to driving a consumer car at F1 speeds.

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“Because the yield rate is so low, anything beyond 7nm is simply not possible, rather than a cost-optimized solution for advanced processors.”

Yang said SMIC has state support, so it can afford to manufacture advanced chips using less profitable processes.

“Because Huawei does not have access to overseas foundries, China relies heavily on SMIC for chips it urgently needs, which will likely be used for ‘special non-commercial uses,’” he said. rice field.

These non-commercial uses include advanced weaponry for China’s expanding military.

One of China’s biggest tech giants, Huawei’s relationship with the Chinese military has long been a concern for Washington, with the Trump administration adding the company to its “entity list” of sanctioned companies in 2019. We’ve reached a climax.

Under Chinese President Xi Jinping, leveraging private sector innovation to strengthen China’s defense sector has become a national priority, and its military-civilian fusion strategy is a pillar of its industrial policy.

“Smart weapons require chips. This is one of the reasons why many policymakers are so concerned about the development of China’s semiconductor industry,” said a technology development expert at the City University of Hong Kong. Douglas Fuller told Al Jazeera.

China is still believed to lack the technology to produce sub-7nm chips, but companies such as SMIC and Shanghai Micro Electronics Equipment Co are rushing to develop their own homegrown machines to break the deadlock.

“SMIC engineers complain that these machines are prone to problems. I mentioned

“China is years behind in making chips with foreign tools, but decades behind with home-made tools.”

Chinese firms can also continue to design chips smaller than 7nm, even if they cannot necessarily produce them yet.

Last year, Alibaba unveiled one of China’s most advanced designs, the Yitian 710 — a 5nm server chip built for a range of internet-of-things (IoT) applications.

Even so, Washington’s latest restrictions are set to make the design phase for next-generation chips — those under 5nm — harder, too.

The next-gen chips are expected to rely on the emerging gate-all-around (GAA) design, which is widely considered a solution to the physical limitations of shrinking chips to infinitesimally smaller sizes.

“The ban impacts China’s pipeline today, but won’t hit their products and revenue for years to come since GAA will only be for 2nm nodes and under, which haven’t arrived yet,” said Patel, adding that 2nm nodes could make up half the output of the world’s leading chipmaker, Taiwan Semiconductor Manufacturing Company (TSMC), in the coming decades.

“It will be hard [for China] to avoid these EDA suppliers,” Patel said. “But cadence [a leading American EDA supplier] has a joint venture in China and offers design programs in China at discounted prices compared to US customers. As such, China may have some influence over the company and put pressure on them. ”

Yang said China will do all it can to procure the lithography equipment it needs if it is prevented from buying on the open market.

“This could involve reverse engineering, IP theft, or strategic acquisition of a foreign company, which has happened many times in the past with other important technologies,” he said. said.

China is also seeking breakthroughs by investing resources in alternative materials to silicon such as carbon. Beijing has included research on carbon fiber, graphene, silicon carbide, and other carbon-based composites in its 14th Five-Year Plan.

“It’s a potential technology of the future, but it’s not yet proven on a large scale,” Patel said. “You can make super-fast chips in the lab with incredible clock speeds, but making them in an economically viable model is a whole different story.”

“If it turns out to be the technology of the future, China is just a touch closer to the forefront.