Enterprise

Experts raise eyebrows at claims China has successfully deployed advanced chipmaking technology at scale

There are reasons to be skeptical that China’s homegrown chip manufacturer SMIC has started shipping processors that are two generations ahead of where the industry believed it was.

A Chinese flag near a logo atop the Semiconductor Manufacturing International Corp. (SMIC) headquarters in Shanghai, China, on Tuesday, March 23, 2021. SMIC will build a $2.35 billion plant with funding from the government of Shenzhen, the first major project to emerge from Chinas masterplan to match the U.S. in advanced chipmaking. Photographer: Qilai Shen/Bloomberg via Getty Images

The report raises more questions than it answers about China’s current manufacturing capabilities.

Photo: Qilai Shen/Bloomberg via Getty Images

China has long lagged the U.S., Taiwan and South Korea in the development of advanced chip manufacturing technology, despite having committed hundreds of billions of dollars to eliminate the gap. A report last week created substantial buzz among chip watchers that one Chinese manufacturer might have closed that gap, but the report raises more questions than it answers about China’s current manufacturing capabilities.

Bloomberg News reported last week that Chinese SMIC may have managed to move its chip manufacturing tech ahead by two generations, in spite of U.S. sanctions designed to curtail its ability to obtain the advanced technology necessary to do so. Based on an analysis of a MinerVa Bitcoin mining chip, research firm TechInsights concluded China’s largest chip manufacturer had produced a 7-nanometer chip using a manufacturing process that was a reasonable replica of a similar method used by TSMC — albeit several years earlier.

Senate Majority Leader Chuck Schumer repeated the claim about China’s chip tech gains on the floor of the upper chamber Thursday during a short speech that discussed a long-delayed $50 billion subsidies package designed to return more semiconductor manufacturing to the U.S.

“Members of both sides know that America's chips crisis is sending shock waves across the economy,” Schumer said. “It is endangering our national security. According to an article by Bloomberg, China's top chips maker has now likely advanced its tech by two generations, threatening U.S. competitiveness.”

It would be big, if it’s true.

But the idea that SMIC had managed to leap ahead two generations of advanced manufacturing tech was met by skepticism in some corners of the chip industry. As with any chip manufacturing technology leap, making a few thousand chips from the new process isn’t worth much — the largest chip manufacturers need to print hundreds of millions of chips to make it a viable business.

“One chip does not make for a [good business] — it’s one thing to make a single chip, but it’s another thing to have yield and volume,” Georgetown Center for Security and Emerging Technology research analyst Will Hunt said. “You need [yield and volume] to be competitive in the market, or to take significant share.”

The SMIC chip itself is also tiny, relatively speaking. Smaller chip designs allow manufacturers to fit larger numbers of individual chips onto each silicon wafer, which means even if the overall yield of working chips is poor compared to high-quality manufacturing processes, it’s likely that there are still many usable pieces of silicon after the wafer is diced up.

But the Bitcoin mining processor taken apart by TechInsights lacked some of the technical elements necessary to make the sorts of chips Huawei — which is on a U.S. export blacklist — needs. Hunt pointed to the lack of static random access memory, or SRAM, that is one of the fundamental components of the most advanced processors made by the likes of Intel and AMD.

Regardless of the concerns, experts contacted by Protocol agreed that the Chinese company’s engineers had marked an achievement of sorts — just by producing prototype 7-nanometer processors with the tools China has access to.

Protocol wasn’t immediately able to verify that SMIC manufactured the MinerVa chips in question. SMIC itself didn’t return a request for comment, and MinerVa CEO Marc Ma said he wasn’t able to disclose his manufacturing partners because of non-disclosure agreements the company had signed.

“I can’t mention the foundry or those kinds of things, because we have an NDA with all the foundries,” he said. “So we’re just using the latest technology to make Bitcoin mining more efficient. We’re trying to cut the cost down, that’s pretty much our goal.”

Ma downplayed the importance of the nanometer number when discussing manufacturing tech, describing it largely as a marketing number. In the past, that number used to refer to the size of specific features, but it doesn’t any longer.

According to filings with the SEC, at least two U.S.-based Bitcoin mining companies haven’t received the full allotment of MinerVa mining machines they had been promised. Stronghold Digital Mining said in a filing it had ordered 15,000 miners for roughly $73 million, but as of March had received about 3,200.

Ma said that’s because of supply chain disruptions and component shortages, and that the company’s original supply chain was highly dependent on China. Ma pointed to pandemic-related lockdowns in China, and vowed the company was moving production to Canada and the U.S.

SMIC’s recent public filings disclosed that most of the company chip output was using far less advanced manufacturing technology. The most advanced manufacturing tech listed in the filing is roughly a decade old and accounted for nearly a quarter of SMIC’s revenue. In the filing from earlier this year, the company didn’t disclose more-advanced process nodes, but the company has said it achieved more-advanced manufacturing tech in 2019.

To achieve the 7-nanometer process, Hunt speculated that SMIC likely retrofitted equipment it already had prior to its addition to the U.S. Entity List in 2020, effectively banning it from buying U.S. chipmaking tools and other equipment.

According to one person familiar with data from the electronics manufacturing and design trade organization Semi, which tracks new factory construction, SMIC has not broken ground on new fabs for 14-nanometer or 7-nanometer production. But it’s possible SMIC could retrofit its current fabs for advanced manufacturing.

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